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MASTERING 
POWER PRODUCTION 



MASTERING 
POWER PRODUCTION 

The industrial, economic and social 
problems involved and their solution 



BY 



WALTER N! POLAKOV 




NEW YORK 
THE ENGINEERING MAGAZINE COMPANY 

1921 






Copyright 192 1, by 
THE ENGINEERING MAGAZINE COMPANY 



PRE6S or 
BRAUNWORTH It CO. 
BOOK MANUFACTURERS 
BROOKLYN, N. V. 

\ a ?? 
©CU653593 



V 



TO THOSE WHO 
PRODUCE FOR THE COMMON GOOD 



MASTERING POWER PRODUCTION 
DIAGRAM OF CONTENTS 



INTRODUCTION 

Descent of the principle of 
production for use 



Chapter the First 
POWER INDUSTRY 

As an economic factor 



PLANT 




Chapter the Second 
LOCATION OF PLANTS 



Chapter the Fourth 
MASTERING MATERIAL 



Chapter the Third 
EQUIPMENT OF PLANTS 



Chapter the Sixth 

MASTERING 

LABOR PROBLEMS 



Chapter the Fifth 
MASTERING MAINTENANCE 




Chapter the Seventh 

MASTERING 

LABOR COMPENSATION 



Chapter the Fiqht 
MASTERING PROCESSES 




Chapter the Ninth 
ANALYSIS OF 
PERFORMANCE 



Chapter the Tenth 

ANALYSIS OF 

EXPENSES 




Chapter the Eleventh 
POWER AS COMMODITY 



PREFACE 

EFFICIENCY in mastering the production of power received 
little attention under a regime aiming merely at the accumula- 
tion of profits rather than at rendering essential service, for it was 
comparatively simple to transfer the cost of inefficiency and waste 
to the consumers through price increases. 

The bees and the ants of prehistoric periods performed their 
work in the manner identical With ants and bees of to-day. No 
expert bee taught the posterity how to produce more honey in less 
time; no expert ant trained the rest of them how to build hills 
quicker and with less exertion. Human conception of time is the 
working force of progress and improvement inasmuch as we seek, 
learn and teach how to produce greater results in lesser time, thus 
saving the time allotted us in our lives to live. Moreover, in my 
discussion of Universal labor, I attempted to show that the cumu- 
lative work of past generations lives through the ages and benefits 
even remotest posterity thus, through creative work of engineering 
minds, we approach the eternity. 

If we apply this criterion to all our work — the human energy 
expended for production of any result — we must apply it in rela- 
tion to time not only because we live within a limit of time, not 
even because time can not be created, stopped or extended but 
principally because the conception of time is distinctively human, 
is the factor and the exponent of the entire progress of human life. 

As the function of motive power is to replace the physical exer- 
tion of human and animal labor, the efficiency of its production 
should be measured as the ratio of human energy spent to that saved, 
not in terms of money expended and received. If it is true that 
one horse-power-hour of mechanical energy is equivalent to twenty 
man-hours of labor there would be no object in producing one horse 
power of energy by putting to work twenty men. In other words, 
the labor power expended in the mining, preparation and transporta- 
tion of! fuel, plus that used in converting the potential energy of 
the fuel into the ultimate form of applied power, plus the labor 
power worked into all the supplies and materials consumed, and 
such portion of the labor power as is necessary for construction and 
replacement of all equipment entering into or contributing to the 

ix 



generation of the power, must be smaller than the sum total of all 
the labor power released through the application of this power when 
generated. 

If a coal miner therefore produces 1000 pounds of coal in one 
hour our thermal equivalent of one man-hour is 14,000,000 B. t. u. ; 
if in production of mechanical power we get the use of only 10 
per cent of it or 1,400,000 B. t. u., it means that out of the average 
life of a man we cause him to waste nine years out of every ten 
years. Again, if we learn how to save J^ of our waste, we either 
double man's productivity within his life or give him a new lease 
on life to enjoy and to advance. 

Moreover, if our 1,400,000 B. t. u., put to work save only one 
man-hour work, the whole system is in deadly animal stagnation; 
but the greater is the time saved by application of this mechanical 
power to our productive life activities the greater is the progess 
of our material life, for it means that one man-hour of miner's 
energy releases on the other end l-j-2n man-hour energy, which 
may mean either that same production can be carried by lesser 
number of men in the same time or the same number of men work- 
ing less hours can produce same amount of goods or a greater 
quantity of goods may be produced within the same time with 
equal or smaller number of men. 

The problem of mastering production resolves, therefore, into 
mastering of time, or what is the same, extension of human life 
and happiness. 

Yet even this aim alone is narrow and unsatisfactory. Mere 
"avoidance of starvation" or "chicken in every peasant's dinner 
pot," appear to-day, in view of the advancement of science and tech- 
nology, as an uninspiring daily toil. A higher ideal, a more inspir- 
ing aim of self expression is instilled into the masses of even most 
downtrodden people by the retrospect of the past struggle for mere 
animal existence. A desire to create can no longer be suppressed 
in the human masses. In politics as in the factories it is no longer 
a full dinner pail that is the goal ; it is but an indispensable means 
for self-expressive creation, for self -projection into the time-to- 
come. 

So long as the stores of natural energy were considered inex- 
haustible the favorable ratio of labor necessary to harness it, and 
the labor saved by its application, were easy to secure. However, 
since the end of these natural resources is in sight, we must learn 
to use them so sparingly that should we be called to reproduce the 
sources of energy artificially, the labor required would still remain 



XI 



smaller than the labor which would be needed to produce commodi- 
ties without such aid. Laying aside the possibilities of discovery of 
new forms of energy, or developing more efficient equipment for 
utilizing the most common source of power — fuel — our immediate 
task is to devise a method to make the best use of what we have. 

The technology of such a method of mastering power produc- 
tion, as has proven under the most trying circumstances of recent 
economic, social and political convulsions to be invariably capable 
of bringing about most desirable results, is the subject of this 
volume. This method is thoroughly democratic since it substitutes 
for arbitrariness openly established facts, and voluntary cooperation 
while rewards commensurate with service take the place of auto- 
cratic coercion. It is based orfthe knowledge of facts ; it is carried 
forward by those who have proved their ability to render service; 
it aims to benefit the community. 

It was not my intention to compile a text book on power engineer- 
ing; it was rather my care to avoid the treatment of any technical 
subject which could be found elsewhere in engineering literature; 
but I could not avoid trespassing in the adjoining fields of psychology 
and economics, for without familiarity with these sciences the mas- 
tery of power production is a futile attempt. 

I do not hold that the principles upon which the method is 
laid out are subject to choice or opinions, for they are based on 
facts. Yet work of this character can not be complete, or examples 
may be ill chosen, for it deals with living and constantly reshaping 
relations and applies to things in process of development. 

If this work and its underlying idea will facilitate the solving 
of some of the problems now in the course of rapid evolution in 
our industrial relations, I shall feel that my own and my readers' 
time have not been altogether lost. 

The plan of treatment of the subject is simple: The first three 
chapters state, in order, the economic principle behind the production 
of power, consider the power, industry as an economic factor, present 
the factors that govern, or should govern, the location of power 
plant sites, and then take up equipment in particular reference to 
faults of arrangement and the underlying economic concept. 

Then follow five chapters that refer directly to the title of the 
book; namely; mastering materials; mastering maintenance; master- 
ing labor problems; mastering labor compensation; mastering proc- 
esses. Two chapters are given over to analyses of performance and 
expenses, while the final chapter turns to a consideration of power 



Xll 

as a general commodity, as something that is distributed and con- 
sumed. 

The title of this volume was first used to head a series of articles 
published in INDUSTRIAL MANAGEMENT during 1918. The 
matter, however, bears little resemblance to those papers, for while 
the basic idea has been retained, its development has been enlarged 
and broadened, and its presentation has been enriched by numerous 
examples and illustrations. In this new working out I am pleased 
to give acknowledgment to my friend, Mr. L. P. Alford, late Editor 
of INDUSTRIAL MANAGEMENT, for his encouragement and 
editorial assistance. 

Walter N. Polakov. 

New York, N. Y. 
August, 1920. 



CONTENTS 

PAGE 

Preface • ix 

INTRODUCTION 
The Descent of the Principle of Production for Use i 

CHAPTER THE FIRST 

/ 

The Power Industry as an Economic Factor 21 

CHAPTER THE SECOND 

The Location of Plants 45 

^Service Requirement Upon Location 46 

Conservation Requirements Upon Location 47 

. Centralization of Plants 52 

Isolated Plants 56 

\/Examples of Plant Sites 57 

CHAPTER THE THIRD 

The Equipment of Plants 64 

Power Plant Lay-Out 64 

'■- Common Faults of Arrangement 68 

Characteristic of Equipment 70 

Economic Conception 74 

CHAPTER THE FOURTH 

Mastering Materials 93 

Purchases 99 

Prices vs. Use Value of Materials 102 

Coal as an Example 103 

Engineering Direction of Purchases 105 

Managerial Functions 114 

Care of Material 114 

Necessity of Planning for Handling of Material 116 

CHAPTER THE FIFTH 

Mastering Maintenance 118 

Distinction between Upkeep and Repair 119 

Depreciation of Efficiency 120 

^Planning Maintenance Work 126 

Mechanism for Maintenance Work 131 

Cooperation between Operating and Maintenance Forces 136 

xiii 



XIV 

CHAPTER THE SIXTH 

^ PAGE 

Mastering Labor Problems (Conditions) 139 

Autonomous Cooperation 140 

Aims of Labor 145 

Right to be Lazy and The Right to a Job 152 

Qualification of Men 159 

The Working Day 163 

Fatigue 167 

Universal Labor 172 

The Position of an Engineer 179 

CHAPTER THE SEVENTH 

Mastering Labor Problems (Compensation) 181 

The Social Aspect 186 

The Economic Aspect 187 

The Basis of Wages 1 89 

Incentive Payments 193 

Profit Sharing 196 

Premium Plans 200 

Rewarding Individual Efforts 204 

Two-Rate Wages 206 

CHAPTER THE EIGHTH 

Mastering Processes 220 

Unscientific Method 222 

Scientific Method 223 

Avoidable and Unavoidable Losses 227 

Steps in Investigation 229 

Instrument Equipment 230 

Securing the Knowledge 236 

Presentation of Knowledge 243 

Acquiring the Knowledge 246 

Progress Due to Training 256 

Results of Operation 274 

CHAPTER THE NINTH 

Mastering Records 277 

Purpose of Records 2yy 

Classification of Records 281 

Methods of Collecting Necessary Information 284 

Methods of Presenting Data 287 

Function of Plant Records 290 

Collecting Data 290 

Keeping Men's Time 291 

Keeping Machines' Time 295 

Store Keeping 296 

Operating Data 298 



XV 



PAGE 

Service Records 302 

Analyzing Data 308 

Calculation of Records 309 

Presentation of Records 315 

Using Data 324 

CHAPTER THE TENTH 

The Analysis of Expenses 327 

Expenses and Cost 329 

Relation of Production and Cost 333 

Relation between Efficiency and Cost 338 

Predetermination of Costs 340 

Expenses of Idleness / 353 

Classification of Expenses 361 

Analysis of Expenses 372 

Cost of Purchased Power 386 

CHAPTER THE ELEVENTH 

Power as a Commodity 391 

Historical Review 393 

Prospective Review 404 

Sale of Power 415 

Conclusion 420 



ILLUSTRATIONS 

INTRODUCTION 
Fig. page 

i. Relation of Demand to Production 3 

2. Progress of Work Chart 7 

3. Relation of Imports to Requirements 11 

CHAPTER THE FIRST 

4. Idle Productive Capacity in a Factory 23 

5. Distribution of Wealth 25 

6. Relative Prices of Commodities before the War 29 

6^4. Rise of Wages Lags behind Increased Cost of Living 31 

7. Coal Waste in an Average Plant; 41 % 35 

8. Coal Waste in a More Careful Plant; 34% 39 

9. Coal Waste in a Systematized Plant; 18.4% 41 

CHAPTER THE SECOND 

10. Map of the Philadelphia District 59 

11. Barton Power Scheme 61 

CHAPTER THE THIRD 

12. Centralized Instrument Board 66 

13. Non-slippery Walks and Railing f . 66 

14. Goggles That Protect f. 68 

15. Sloppy Boiler Room with Disreputable Seats f. 70 

16. Bad Arrangement for Wheeling and Weighing Coal f. 72 

17. Restful Seats that Help Firemen to Save Coal f. 74 

18. Two Characteristic Load Curves . . 75 

19. Load Curve and Heat Input Balanced 77 

20. Input and Output Lines of a Plant 78 

21. Smith's Diagram for the Determination of Maximum Commercial 

Economy 79 

22. Diagram of a Test of a Water-Tube Boiler 80 

23. Diagram of Rate of Driving of a Gere Boiler and Velocity of Gases in 

Gas Passages 81 

24. Diagram of a Test of a Locomotive Boiler with Schmidt Superheater .... $2 

25. Test Curve of Curtiss Turbine 83 

26. Test Curve of a 30,000 Kw. Cross-Compound Turbine 85 

27. Record of Nine Different Boiler Performances 86 

27^4 . Heat Inputs in Six Typical Cases 87 

28. Expenses of Excessive Plant Equipment 89 

29 Increased Non-Use Expenses with Reduced Load 91 

xvii 



XV1U 

CHAPTER THE FOURTH 
Fig. page 

30. Wholesale Prices of Representative Coals 95 

31. Relative Values of Coal By-Products 97 

32. Cost of Fuel Per 1000 lbs. of Steam 101 

33. Relation Between Ash Content and Furnace Refuse 104 

34. Relation of Efficiency of Gasification and Losses of Combustible in 

Refuse 109 

35. Weekly Coal Report Ill 

CHAPTER THE FIFTH 

36. Depreciation of Plant Efficiency Due to Poor Maintenance 121 

37. Deterioration of Efficiency 123 

38. Schedule of Maintenance Work 125 

39. Inspection Route Card 127 

40. Progress Chart — Boiler Construction 129 

41. Graphic Record of Testing the Instruments 131 

42. and 43. Work Order Form and Its Reverse Side 133 

44. Maintenance Record Card 135 

45. Maintenance Record Card — Reverse Side 137 

CHAPTER THE SIXTH 

46. Management Record Chart 147 

47. Chart of Requirements and Deliveries 149 

48. Power Requirements and Available Generating Capacity 151 

49. Man-Record Chart (Gantt) f. 160 

50. Decrease of Efficiency with the Lengthening of the Working Day 162 

51. Fluctuation of Power Consumption Indicating the Influence of 

Fatigue f. 170 

52. Number of Accidents in Relation to Fatigue 171 

53. Hourly Factory Outputs and Power Consumption as an Index 175 

54. Fatigue- Producing and Energy-Saving Shovels f. 176 

CHAPTER THE SEVENTH 

55. Group of Workers in a Power Plant f . 184 

56. Steam and Coal Consumption per Pound of Cloth Bleached 201 

57. Relation between Secondary Rate of Wages and Cost of Production 207 

CHAPTER THE EIGHTH 

58. Net Saving Due to the Use of Boiler Room Instruments 225 

59. Boiler Room Instrument Board f. 226 

60. Instrument Board in a Boiler House f. 230 

61. Boiler Control Board f. 232 

62. Instrument Board in a 8-Unit Boiler Room f. 234 

63. Instruction Diagram 237 

64. Log of the Test of Hydro-electric Plant 239 

64-4 . Log of a Test 241 

65. Instruction Diagram 245 

66. Graphic Instruction 247 



XIX 

Fig. page 

67. Steam Consumption Calculator 249 

68. Instruction Card for Firemen 250 

69. Instruction Card for Firemen 251 

70. Time Study Sheet (Front) 253 

71. Instruction Card for Coal Passers 254 

72. Fireman's Indicator 255 

73. Man Record 259 

74. Man Record (Continued) 260 

75. Man Record (Continued) 261 

76. Effect of Poor Maintenance on Plant Efficiency 263 

77. Man Record Chart 265 

78. Two- Year Record of Power Plant Progress. 267 

79. Increased Efficiency and Reduced Coal Consumption f. 270 

80. Increased Efficiency and Reduced Unit Cost 271 

81. Comparison of Operating Cost Tendencies in Two Railroad Electric 

Plants 272 

82. Bonus Record 273 

83. Bonus Record (Continued) 275 

CHAPTER THE NINTH 
84 and 85. Recording Attachment to a Beam Scale f. 283 

86. Record of Coal Weighed 285 

87. Display Record 289 

88. Old and New Styles of Time Cards . , 292-3 

89. Specimen of a Power Plant Log f . 293 

90. Stores Issue Card , 297 

91. Log of a Large Central Station f. 298 

92. Log of a Smaller Public Utility Plant 300 

93. Log of a Medium Mill Power Plant 302 

94. Power Distribution Report 303 

95. Daily Trouble and Interruption Report 305 

96. Power Distribution Record 307 

97. Result of Work Report to Individual Employee 309 

98. Calculating Board f. 310 

99. Power Plant Log Calculator 311 

100. Hollerith Card as Used for Classification of Expense Data 312 

1 01. Machine for Classification and Sorting of Hollerith Cards f. 312 

102. Short Form of a Daily Performance Report 313 

103. Report to Fuel Agent 315 

104. Who Is Who in the Boiler Room: f. 316 

105. Equipment Utilization Chart 319 

106. Fuel Utilization Chart 320 

107. Fuel Utilization Chart 32 1 

108. Skill Utilization Chart 323 

CHAPTER THE TENTH 

109. Table of Variation of Expenses in Relation to Output 337 

no. Variation in Total Cost of Production with Variable Plant Output. . . . 339 
in. Curves of Standard Operating Cost for Hydro-Electric Plant 345 



XX 

Fig. page 

i 12. Standard Operating Cost Curves 347 

1 13. Curves of Standard Operating Cost 348 

1 13A. Curves of Standard Operating Cost 349 

114. Graphic Comparison of Actual and Standard Unit Costs 351 

115. Expense of Idleness in a Typical Factory Power House 356 

116. Power House Idle Expense Report 357 

117. Power Plant Expense Analysis 364-5 

118. Monthly Comparative Cost Report 367 

11 8.4. Monthly Comparative Cost Report 368 

1 19. Monthly Expense Statement 373 

120. Progress of Reducing Expenses in Plant 374 

121. Progress of Reducing Expenses in Plant 375 

122. Power Cost Analysis 377 

123. Details of Operating Expenses, Electric 378 

124. Details of Operating Expenses, Electric 379 

125. Graphic Cost Record 382 

126. Graphic Cost Record Card 383 

127. Graphic Relation between Actual and Standard Costs 385 

128. Comparison of Promised Saving and Actual Costs 387 

129. Comparison of Costs of Purchased and Generated Power 388 

130. Graphic Analysis of Terms of Contract for Purchased Electric Power. . f. 390 

CHAPTER~THE ELEVENTH 

131. Man- Power Development Applied to Irrigation f. 393 

132. Primitive Water-Power Development f. 393 

133. An Example of a Thermal Power Plant f. 398 

134. An Example of Electric Distributing Substation f. 398 

135. Electrified Railroad Line in Europe f. 402 

136. Growing Consumption of Electrical Energy in U. S. A 405 

137. Average and Best Practice in Coal Utilization 407 

138. What Becomes of Our Coal — Disposition of the Miner's Yearly Output. . 409 



MASTERING 
POWER PRODUCTION 



Introduction 
THE DESCENT OF THE PRINCIPLE OF PRODUCTION 

FOR ysE 



". . . therefore the railroads clog up and fires go out . . ." 

THE fuel famine of 1917-1918 was expected by those who 
understood the economic and industrial relations. 1 Those who 
were called to master national production were forewarned; more- 
over, it was not in their interests to hinder production, to delay 
shipments, to jeopardize our army, or to spread misery at home. 
All that did happen however and the Fuel Administrator summarized 
the situation that developed as follows : "War munitions, food, 
manufactured articles of every description lie at our Atlantic ports 
in tens of thousands of tons, while literally hundreds of ships, wait- 
ing loaded with war goods for our men and the Allies, cannot take 
the seas because their bunkers are empty of coal." 3 

When production had to be speeded up, almost to the exclusion 
of laws and precedents; when ships were at a premium and a 
gigantic shipbuilding program was laid out; when we rolled up our 
sleeves and set our jaws to win the war against autocracy, then it 
was that factories had to close, railways announce embargoes, no 
anchorage space was left in New York harbor, 8 and to crown it 
all, the industries were ordered to cease production for ten days 
and five Mondays to straighten out the prevailing disorganization. 4 
It seemed almost inconceivable that at a time of such acute fuel 
shortage, about twenty per cent of our transportation facilities were 
put to the useless task of conveying an excessive amount of ashes 
in coal polluted by incombustible matters. 5 Such, however, were the 
facts. 

Similar mismanagement reigned supreme not only in the ranks 
of coal producers but among the coal users as well. The annual 



tonnage of coal wasted by mismanagement of power plants is var- 
iously estimated by different writers as being between 50,000,000 
and 100,000,000 tons per year. 6 The old industrial and economic 
system demonstrated its incompetency to carry out production and 
distribution for use. Its organization was designed to conduct busi- 
ness for profit and any other function was beyond its competency. 
Cooperation, the fundamental prerequisite of democratic organiza- 
tion was found wanting in the regime founded on competition and 
the best substitute that could be found in the emergency was 
an enforced coordination. Even such compulsory, arbitrary co- 
ordination of efforts as could be devised in the rush of events 
proved vastly superior to the disorganized, individualistic scramble 
of unharnessed competition. Said the London Economist of British 
experience: ". . . now, after three years of experimentation it 
is becoming widely realized that we cannot go back to our 
old, free untrammeled individualism. We can no longer conduct 
business, each man for himself, each industry for itself, on the prin- 
ciple of devil-take-the-hindmost. Cooperation under state compul- 
sion has shown us what might be achieved by cooperation under 
voluntary organization. Inefficient as is industry under government 
control and management, yet we have seen how very great was 
our frictional wastage before the war under our old free competitive 
system. The country, by mobilizing its man and woman power, and 
directing it to one common purpose, has achieved results which are 
the wonder and admiration of the world." 

What the economist points out is the small measure only of reduc- 
tion of wastes caused by competitive disorganization in early at- 
tempts of the British government at state socialism — directing pro- 
duction to one common purpose — satisfying military and civilian 
needs. To more fully appreciate the accomplishment one must 
consider the number of able-bodied men withdrawn from productive 
occupation and engaged in a large-scale destruction of a goodly 
portion of the product of the remaining working force. How much 
greater production may be expected from voluntary cooperation 
directed toward positive, creative, well-planned, joint efforts, than 
from enforced coordination, which has rather a negative value of 
restricting the competitive wastage, can only be conjectured. 7 The 
initial strength of Germany was due in no small degree to the same 
paternalistic prevention of dissipation of national efforts which arbi- 
trarily directed all the forces of the nation to one aim of world 
domination. Yet this very purpose contains the abnegation of the 
means — cooperation for competition! The Hegelain philosophy 



itself should have told them that the only possible outcome of such 
internal contradiction would be an inevitable destruction from within. 
The irreconcilable contradiction between compulsory coordina- 
tion and voluntary cooperation has too often been overlooked and 
confused. The aim necessarily determines the choice of means; 
while a centralized coordination, well exemplified in a military type 
of organization, is preeminently fitted for the destruction, oppres- 
sion, and domination of the few, the productive, free activity calls 




Fig. i. — Relation of Demand to Production 

From a study made by "Searchlight," based on data of Federal Trade Com- 
mission, Council of National Defense and from other sources. 

for cooperation of all creative forces prompted by the motives com- 
mon to all. 

Not even half a century ago, the following lines were regarded 
as a dream of a millennium ; to-day, having a mechanism developed 
by engineers, this Utopia appears as a most practical and inevitable 
outcome of internal contradictions shattering our entire economic 
structure. "A system of labor, organized upon a plan of liberty 
and democratic equality, where each stands for all, and all stand for 
each, and where the sense of solidarity reigns supreme, — such a 
system would generate a spirit of industry and of emulation 



4 

nowhere to be found in the modern economic system. Nor could 
such a spirit of industry fail to have its effect both upon the pro- 
ductivity of labor and the equality of labor's product. Furthermore, 
seeing that all are mutually active, the interest becomes general in 
the best possible production of goods, with the object of saving 
labor, of gaining time for the production of further wealth, and 
looking to the gratification of higher wants. Such a common interest 
spurs all to lend their thoughts toward simplifying and quickening 
the process of labor. The ambition to invent and discover is stim- 
ulated to the highest pitch; each will seek to outdo the other in 
propositions and ideas." 8 

Mr. H. L. Gantt felt that the responsibility for the absence of 
such cooperation rests with "the commercial man, who has not yet 
recognized that the prosperity of all is directly helped by the pros- 
perity of each. As yet he has no idea of what real cooperation 
means. His idea of cooperation is that of the herd, whose 
cooperation is for the attack or defense."' Yet, this commercial 
man, as well as manufacturer or his financier, fall themselves the 
victims of the organization which is fit only for destruction, whether 
it is destruction of competitors, of natural resources, or of oppor- 
tunities. The fact is that the organization for production is as yet 
in its infancy. We know organizations to sell goods, to uphold 
prices, to combat unions, to fight legislation, to suppress vice, to 
enforce tariffs, or to impose our will or belief on others. All pro- 
ductive, creative organizations, as we have so far had, were at 
the same time inevitably engaged, and to a far greater extent so, 
in competition between themselves and in combating other antagon- 
istic forces; obviously this diversion of efforts has limited and 
weakened their productive power. 

The suitability of old autocratic forms of organization for their 
purposes of fight, of oppression, and domination has a successful 
history ; yet with changing forms of life, with new means of produc- 
tion, and with correspondingly re-shaped ideals there can be no 
assurance that what has been successful under the conditions of 
the past will be equally applicable at present and will attain the 
new aims. To the contrary, endless examples give us unimpeachable 
proof that these methods are no longer fit for our requirements and 
the longer we practice them the more serious is the friction of 
internal contradictions, the more appalling is the waste, and the 
greater the social unrest. The discovery of new forms of organiza- 
tion is a long and painful process, and the people are loath to leave 
the old familiar and traditional forms of relations; still harder it is 



for some to part with their privileges. Moreover, we have as yet 
no example to follow for, as a well-known engineer has put it: 
"We have to find new ways and means, accomplish a thing which 
has never been accomplished before — cooperative organization of 
a democratic nation." 10 



II 

"The passing of administrative control from the agents 
of those who would live by their past, to the agents of those 
whose hands are actually upon the levers, has now become a 
pressing and imperative necessity." 



11 



In the old order of things 4he master was he who had the title 
to the means of production: the owner of the land, the owner of 
the tools, the owner of the slaves, or the possessor of the money to 
buy the tools, the land, and the labor. The owner of weapons and 
of skill to wield them became a master of masters, since he had 
the might to take. 

The mode and the purpose of the use of the property remained 
arbitrary so long as it concerned no one but the owner himself. 
When however the scale on which the production and exchange 
was carried out assumed larger proportions the ownership of various 
large means of production and distribution became collective. A 
similar process is observed in government. The individual potentate 
or Ceasar gave way to triumvirates and even republics. 

As the complexity of productive operations grew with the 
development of technique, and the size of the corporate or individual 
holdings increased, the task of managing enterprises required more 
individual attention and often more skill than the owner of the 
property-title possessed. It thus became necessary to delegate the 
management of certain branches and sections to trained agents, the 
owner or owners still retaining the right to prescribe the policy and 
determine the destiny of the enterprise. A parallel transition took 
place in the management of, national affairs. Kings delegated the 
ruling of provinces to their vassals or governors. 

The history of the evolution of industrial organizations has thus 
been a gradual delegation of managerial functions by the owner 
to his agent, until the owner became completely relieved of the 
duties of directing the administration or operation of the property. 
While it is still possible that the owner may perform any administra- 
tive or managerial function, it is equally possible and more common 
that a person investing his money in an enterprise not only does not 



partake in its conduct but even does not know what he owns — his 
agents administering his estate entirely without his knowledge. 
While such is the case of a man handling or speculating with 
various securities, bonds, etc., or heirs often not even knowing 
exactly how their money is placed, the situation in which many 
owners of stocks find themselves in different in form only. They 
may hold the controlling majority of stock and even participate 
in the meetings of directors without having the slightest knowl- 
edge as to the real existing conditions in the enterprise, save the 
financial reports, and remain entirely ignorant as to technical pro- 
cesses envolved in the production they "direct." 

Being thus relieved from active productive functions their interest 
centers on the question of returns on the investment, irrespective of 
the mode of using this investment or the social function of the enter- 
prise they finance. These matters are necessarily delegated to the 
managers of various ranks who are under the obligation to produce 
the returns to the investors. Thus the whole art of managing in- 
dustrial undertaking has been reduced to a skillful profit-making; 
not the making of goods or of commodities, not of rendering service 
but of securing profits chiefly through a medium of marketing the 
product. This process in its elementary form appeared to be de- 
pendent on the ability to buy labor and materials as cheap as pos- 
sible and to sell the product of labor applied to material as high 
as the market will stand. If in the course of production of a 
commodity a portion of the labor was lost (through loss of time 
or poor skill) or an excessive part of the material became unmarket- 
able (through poor process or spoilage) the expense of these losses 
was included in the cost of production as if it had actually been 
worked into the product — according to a simple reasoning that 
since such waste did not benefit the manufacturer it must become 
a part of charge to the consumer. 

With the still further development of technique and science 
even the simplest article required numerous elementary opera- 
tions in its production. High-speed automatic machinery and the 
like shifted the importance from the performance of the operation 
to the coordination of a multitude of various functions and a differ- 
ent form of management became necessary. This need was not 
realized until very recently and the owners for a long time con- 
tinued to attempt to delegate the management to men who were sup- 
posed to know how the things are made though often these skillful 
mechanics and trained designing engineers knew little or nothing as 
to how the productive functions shall be coordinated. 






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Mr. H. L. Gantt in his address in 1912 before the Society for 
the Promotion of Engineering Education, said: "Until recently 
the engineer has regarded his work done when he developed an 
improved machine or apparatus, and proved by operating it for a 
short while that its capacity was all he claimed for it. It has 
often been acquired by men imperfectly trained mechanically, but 
who had the commercial instinct highly developed. Such men usu- 
ally turn it over to a "cheap" man to operate, and its maintenance 
is nearly always looked after by a second-rate mechanic, for the 
commercial man can seldom see why he should have a high-priced 
man doing repairs. The efficiency of the machine naturally de- 
creases and a factory run on these principles must necessarily be 
more inefficient still. " 

Another handicap was frequently encountered in that the man- 
agement was entrusted to men with predominating ability to buy 
cheaply and sell dearly, and whose familiarity with the nature of 
productive processes and mechanism involved was secondary. The 
inevitable consequence of these shortcomings was the inability to 
obtain from the plant those results for which it was designed and 
built. If every one could sell his product at cost plus a desired 
profit the amount of loss and the degree of inefficiency would not 
concern him. The market price however is fixed on the basis of 
the average prevailing cost of producion plus the margin. There- 
fore, if the losses of any one individual manufacturer are larger 
than the average in that industry, his margin for meeting financial 
obligations to others and his own profit may become so small as to 
make it impossible for him to continue the production. In other 
words, he can not raise his prices above those of his competitors 
if he wants the consumer to pay for his losses which are larger 
than those of his competitors. It is not so in a monopolized indus- 
try, as for instance is the case of a single public utility company 
serving the entire community. Again, if one succeeds in reducing 
operating expenses below the average considered normal at that 
time in a given line of production, his margin will increase accord- 
ingly. This fact, one may think, should serve as sufficient stimulus 
to adopt improved methods in order to coin the would-be losses 
into additional profits, were it not for two economic factors. One is 
that the selling expenses in most cases are larger than the manufac- 
turing expenses, and the attention of the financial director or com- 
mercial man is more readily attracted in this familiar direction than 
toward the technical possibilities regarding the nature of which he is 
often ignorant. For this reason the securing of profits was sought 



in arbitrary fixing of selling prices, through combines or legal 
measures, rather than through increase of efficiency of their manu- 
facture. Similiarly, the reorganization of selling methods seems 
more promising to the commercial mind than improvement of pro- 
ductive methods and in the immediate result (as in case of marketing 
a certain make of typewriter) is capable of reducing selling expenses 
sufficiently to forget the manufacturing wastes. While improved 
method is banned through lack of familiarity with the subject, 
though the investments needed are usually insignificant, the improved 
machinery and equipment are costly and increase the overhead or 
burden, thus they are productive of result only when properly 
used. i 

During the past few years "rt became unmistakably clear that 
production carried out for profit only, ruins itself in the long run 
and that the business that reckons with social requirements and 
meets the needs of society receives the highest reward. Pro- 
duction for profit limits the output intentionally keeping it slightly 
below the demand in order to maintain favorable prices. High cost 
of living limits the purchasing capacity of consumers and lowers 
the demand further. Overproduction results and sends the prices 
and values downward, throwing at the same time a number of men 
out of employment, which in turn, tends to lower wages. When 
conditions are again balanced, the demand gains more rapidly than 
its satisfaction is provided and the cycle is repeated. This causes a 
growing insecurity of existence, misery, oppression, degradation 
and exploitation. As Professor Irving Fisher of Yale said : "Amer- 
ican statistics show, such as those of Bradstreet and the Depart- 
ment of Commerce and Labor, wages have risen only about half 
as fast as the cost of living. If it were true that the increasing 
demands of labor unions, by increasing the cost of producing com- 
modities, had resulted in a general increase of prices, these would 
surely have risen more slowly than wages. The facts, however, 
show that the cost of living has increased about twice as fast as 
wages, and this seems to be approximately the rule during any 
period of rising prices. In other words, during rising prices the 
laborer is the loser. In fact, his strikes and insistent demands for 
higher wages represent a belated attempt to overtake the advanc- 
ing cost of living. Labor disputes and demands are thus an almost 
invariable accompaniment of rising prices, but they are effects of 
rising prices, not causes." 12 

Another economic factor of great importance is that of a 
growing necessity to increase the portion of capital invested in 



IO 



the means of production. This develops the tendency of the rate 
of profit to fall unless the production is -intensified to a higher 
rate and the output of commodities greatly increased. This neces- 
sarily develops a contradiction with the first mentioned tendency: 
to limit the supply in order to maintain high prices. Consequently 
such a policy causes a large proportion of expensive machinery to 
stay idle and accumulate burden which, being shifted on the 
shoulders of consumers in the form of price added to the goods 
manufactured with the balance of equipment, works again toward 
the unbalancing the whole structure limiting the buying power of 
the society. In other words, to keep pace with industrial progress 
in order to meet the requirements and competition, improved in- 
struments of production were adopted. Increase of investment 
is followed necessarily by reduction of the rate of profit, and in 
order to secure the same or larger earnings the manufacturer must 
expand the production, that is, increase the investments. This is the 
process we actually observe in our industrial development. Salva- 
tion was sought therefore through raising the commercial profits 
by increasing the selling prices. This method, although temporarily 
expedient, eventually overtaxes the purchasing capacity of consumers 
and creates again a business depression. 

The paradox that adoption of improved machinery reduces the 
rate of profit on the enterprise can be explanied either by the fact 
that the improvement is merely illusory or that an improper use 
is made of the improvements. No careful manager would approve 
a replacement or new installation of equipment, unless study proved 
beyond any doubt that the advantages offered by such a change 
are ample to more than pay for the investment. When the cost 
of production nevertheless increases after an investment is made, 
it indicates plainly that the method of management does not offer 
the opportunity to secure the advantages inherent in the new 
improvement. 

Nevertheless, the tendency of the average rate of profit to fall 
is only a manifestation of the development of the productive powers 
of society. Automatic action, growing speed and capacity of machin- 
ery cause the same number of laborers in the same time to con- 
vert a larger quantity of raw and auxiliary materials into product. 
In other words, the fall of the rate of profit is not due to an absolute 
but only to a relative increase of the part of capital invested in 
means of production over that invested in labor. This law, though 
seldom recognized, is actually followed in our industrial develop- 
ment. It requires an increasing mass of total capital for the pur- 



II 



pose of using the same quantity of labor to secure the same mass 
of profit though at a falling rate of profit. If the mass of \ profit 
is to be increased through the introduction of improved machinery 
(i. e. with corresponding increase of investment) without curtailing 
the wages or lengthening the working day, the intensity of labor 
must be increased. 13 

Thus the falling rate of interest acts as stimulus for the adop- 
tion of new inventions, the improvement of methods, the employ- 



SUMMARY OF TRADES 1918 IMPORTS IN L0N6 TONS 




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Fig. 3. — Relation of Imports to Requirements 
U. S. Shipping Board during 191 8 used a graphic method of co-ordinating im- 
ports to requirements in order to 1 — minimize idle movement of useless commodi- 
ties and 2 — to assure the delivery of needed goods. 

ment of higher grade men, and the payment of higher wages, 
while ultimately it tends toward municipalization and nationaliza- 
tion of industries that are socially essential yet unprofitable for 
private exploitation. This brings us face-to-face with the problem 
of intensification of labor which has occupied the minds of indus- 
trial managers for the last quarter of a century. 

For centuries the economists of all but one school had dili- 
gently obscured the fact that all wealth is created by labor, yet the 
common sense of a businessman told him that profit has no other 
origin but in the ability of the enterpreneur to secure for himself 



12 

a larger product of labor than that purchased. Hence, for a 
long time the chief concern of the management was the intensification 
of labor-power, or more specifically, the intensification of the per- 
sonal efficiency of the workman. The work of Frederick Taylor 
and managerial methods of his school were prompted by the desire 
to do away with the "soldiering" and the inferior skill of work- 
men. His elaborate methods of time studies, extra rewards, func- 
tionalized bossism and elimination of the inefficient are too well 
known to be reviewed here. The one-sided application of so- 
called scientific methods to "speeding up" the workmen made 
the very name of Taylorism obnoxious to organized labor. Socialists 
stood alone in the conflict which was brought even to Congress, 
realizing that this was as inevitable a phase of economic development 
as the introduction of automatic machinery. To resist the process 
of intensification of production would be reactionary, but as soon as 
unskilled introduction of these new methods endangered the health 
and well-being of the workmen, the isolated instances brought about 
a vigorous condemnation, not of the principles however but of the 
mode of their application. 

The official organ of the Socialist party stated on August 24th, 
1911, that "... scientific management must be finally accepted 
and adopted into Socialism, for only there can it find its complete 
expression." And also: "When we condemn it (scientific manage- 
ment) as Socialists, we make a great mistake, for it shows precisely 
how we must proceed in order to make the shop and the factory 
at once scientific, cooperative and capable of responding to modern 
needs." 15 . 19 

The economic evolution of society goes in a definite direction 
and it is not within anyone's power to divert or retard its progress. 
All that can be done is to choose the means to reduce the pains and 
sufferings caused by the transition period. The engineer must 
clearly see the way in order to avoid blundering and wandering in 
the dark. The engineer must assume the role of the leader, since our 
life is squarely based on the production of the necessities of life 
which he alone is capable of understanding and controlling as the 
complexity and intricacy of industrial processes steadily increase 
beyond the comprehension of a businessman. The prophet proclaims 
the new goal ; but he is the leader who lights the way to those who 
want to attain it. "If we clearly see that what we are doing is 
wrong, it would be impossible for us to do so," says Rene Descartes 
in his "Oeuvres" (IX; 170). 

To understand the principles upoo which the new school of 



13 

management is to master production and lead the way to the higher 
forms of industrial and economic relations, a brief review of Bacon- 
Descartes philosophy is indispensable, since their theory of induction 
is the basis upon which the creation of modern positive science 
was made possible. In other words the application of these principles 
to creative activity is the foundation upon which the new indus- 
trial relations can be established. 



Ill 

"We shall be saved not by the Aristotelian syllogism but 

by Baconian induction." " 

/ 

The method of finding out the Truth was for Bacon that of pure 
induction — analysis of a phenomenon in order to bring to light the 
cause of it, supposedly contained in the phenomenon itself. Says he: 
"Whosoever knows any form, knows also the utmost possibility of 
superinducing the nature upon every variety of matter." 18 

In this manner the practical application of discovered truth may 
begin only after the last step of the theoretical analysis is made. 
While induction alone, without the inspiration of scientific imagina- 
tion and use of hypothesis has never led to any discovery, Bacon's 
method of exclusion and elimination is of immeasurable value. His 
principles applied to scientific research work destroy all idols of 
mere authority, time honored opinions or habits. He pointed out 
two kinds of fallacies : "The proneness to support the preconceived 
opinions by affirmative instances, neglecting the opposing cases and 
tendency to generalize from an insufficient number of observa- 
tions." 19 Those who have read Shop Management and On the Art 
of Cutting Metals by F. W. Taylor can readily recognize the influ- 
ence of Bacon on the conduct of these' researches, and the value 
of this inheritance can not be over-estimated. 

The second type of fallacies Bacon exposed and warned us of, 
are those arising from the influence of mere words on our minds. 
The great danger of such semi-hypnotic influence can only be recog- 
nized when we stop to consider how often the crowd accepts and 
follows certain formulae or watchwords, not realizing that they 
are actually being led in quite the opposite direction. It is indeed 
only in fact too often the case that the charm of words has retained 
no meaining under the changed circumstances. 

Rene Descartes put the principle of de omnibus dubitantum est 
as a corner stone for creative analysis and for practical discoveries." 



14 

The method of doubt is at the same time a method of abstraction: 
to obtain truth we must free ourselves by one decisive effort from 
the influence of custom, prejudice, and tradition which generally 
obsess our ideas and action to an extent that we are often unable 
to tell the reason why we do certain things. In practice it resolves 
into ability to distinguish between an opinion and a fact. 

The method of Cartesian school rests upon a proposition that all 
the objects of knowledge fall into series, in each of which there is 
a determining element, simple and irresoluble, while the other ele- 
ments of the group are relative and dependent and can be underr 
stood as subordinate to the basic conception. The analysis thus 
resolved into four groups defined by Descartes are : 

1 Truth requires a clear and distinct conception of its object, 

excluding all doubt 

2 The objects of knowledge naturally fall into series of 

groups 

3 In these groups investigation must begin with a simple and 

indecomposable element 

4 An exhaustive and immediate grasp of the relations and inter- 

connection of these elements is necessary for knowledge in 
the fullest sense of that word. 21 

The method of scientific analysis as applied by Gantt to the prob- 
lems of industrial management is thus outlined in his own words : 
"Such an investigation divides itself into three parts, as follows: 
An analysis of the operation into its elements; a study of these 
elements separately; a synthesis, or putting together the results of 
our study." m 

It now becomes apparent that the method of scientific induction 
applied to industrial and shop problems constitutes the basis of so- 
called scientific management or more properly, application of scien- 
tific method to management. A French critique of Gantt's prin- 
ciples thus pictures them in the Revue Metallurgique: "This is the 
method employed by Claude Bernard and Pasteur, but Gantt is 
nearer to the Cartesians. Gantt is too much an American to develop 
science for the sake of science. The object of scientific investigation 
is to show to the men a better way to cooperate, in fact to make them 
happier and to allow them to develop intellectually. . . . This is 
a point in opposition to German utilitarianism. We have somewhat 
too much forgotten. Gantt and Taine, the most conspicuous thinkers 



of the nineteenth century, conceived the changes which the scientific 
method will bring into organization of society." 

It seems to be superfluous to point out here what wonderful prog- 
ress has been made in all branches of pure and applied science since 
it was based on the principles established by Bacon and Descartes. 
The chemical, electrical, and mechanical discoveries made an enor- 
mous production possible with a simplicity, ease, and speed unbeliev- 
able even a few years ago — talking across the ocean, seeing through 
flesh, synthetic creation of food, air travel, — all exceed the wildest 
imagination of Jules Verne and tales of a Thousand and One 
Nights. 

Reconstructed on the sound scientific basis, the art of manage- 
ment of shops and plants gradually ' shifted the responsibility from 
the workmen to the manager. It is the manager who under this 
regime is expected to know: 

1 What to do 

2 When to do it 

3 How to do it. 

As long as the owners continued to trust the management of 
their affairs to men trained as lawyers and bankers, who still 
base their claims "upon information and belief," the wide applica- 
tion of the scientific type of management was impossible for the 
want of necessary training in the use of scientific analysis. 

The interest in scientific management movement at the begin- 
ning was limited to an imitation of forms and isolated features 
overlooking the basic principles. Room for improvement however 
was so large that even untrained imitators met sometimes with a 
measure of success. The results obtained by "efficiency engineers" 
and "stunt peddlers" while demonstrating clearly what an enor- 
mous wastage was going on in our industrial disorganization, created 
a demand for results rather than for proper methods which neces- 
sarily will be beneficial. The struggle to make workmen personally 
efficient soon met however with an organic obstacle on its way to 
intensification of production. 

While "efficiency engineers" were talking about how to save frac- 
tions of a minute wasted by workmen, the management cared little 
if half of the plant equipment remained idle, due to one cause 
or other. It was not generally recognized that to keep the plant idle 
cost money, usually a great deal more than to let the man stay idle. 
Somebody had to pay for the rent, for all forms of overhead ex- 



i6 

penses or burdens, yet our financial structure devised vicious methods 
of accounting which distributed the expenses of non-use of pro- 
ductive capacity on the product. In other words, as the author has 
pointed out at a meeting of The American Society of Mechanical 
Engineers, m the common practice is "to charge against the cost 
of the product the cost of over-equipment and mismanagement, thus 
imposing on society the penalty for tolerating these conditions in the 
industries." 

The greater the efficiency with which the working portion of the 
equipment is used the larger is the burden imposed by the idle por- 
tion of the plant, and usually the remedy is sought in the advancing 
of prices of the commodities. Higher prices, however, soon over- 
tax the purchasing power of society, and demand falls, leaving still 
more equipment in idleness. ** The problem thus turned toward 
"how to make management efficient." It was realized that "our 
industrial scheme will not be rounded out until we have a means 
of measuring the ability with which those at the head of the business 
perform their functions, that is at least as good as that which we use 
to measure the efficiency of the operative." a5 

In the closure of my paper before the Taylor Society in 1916 
I said: "We have been in the habit, for a number of years, to 
blame workmen, to blame firemen and engineers for poor re- 
sults. I am convinced that this is the gravest mistake. Fifteen 
years experience in this industry, which has put me in 'touch very 
closely with a great variety of power plants, has proved to me that 
the average fireman knows more about power engineering and 
. . . has a cleaner conception of what contributes to the success of 
the business than have some members of the Board of Directors" ; * 
and at the New York meeting of The American Society of Mechan- 
ical Engineers on January 11th, 1916, the author presented a paper 
which offered a method of measuring the efficiency of the plant man- 
agement, in the conclusion of which, he said : "If the principles and 
methods are right, the results will necessarily be the best ob- 
tainable ...."" And in addition to these the series of paper 
presented before various engineering societies 88 during the last 
few years have every time more persistently and clearly exposed 
the necessity and proposed the possibility of measuring the 
managerial efficiency. 

Another far-reaching principle has come to light still more 
recently, namely that of coordination of the productive functions 
not only within a plant but among various plants. Lastly, 
under the stress of conditions imposed by the war, the function 



17 

of distribution and selling products was separated from purely 
productive functions and in many instances taken care of on 
a cooperative basis or by the State. 

The social importance of these three events can not be 
over-estimated : 

1 Recognition of non-use or partial use of means of produc- 

tion leads to the possibility of further vast increase of 
productivity 

2 The method of coordination of productive functions 

on a national (between plants) or international (between 
countries) basis eliminates duplication of efforts and losses 
and thus further enormously increases productivity 

3 Coordination of distribution does away with enormous 

loss of efforts in transportation and marketing while 
limited competition liberates an army of sales forces for 
productive occupations, does away with disorganized 
overproduction, industrial depression, unemployment, 
and hoarding, and assures to the consumer equitable 
prices and a more liberal satisfaction of wants. 

True enough, all those possibilities are far from being fully 
realized, yet the recognition of the principles and the discovery 
of the means whereby the control may be secured, mark the 
dawn of a new industrial era. 

For over half a century the State and business helplessly 
floundered trying to lay out budgets, industrial programs, to or- 
ganize the transportation, to determine true demand for com- 
modities, etc., but the anarchy of production unguided by ac- 
curate knowledge of what is wanted and where and who can 
supply the demand and when, continually frustrated all the well 
meant attempts to introduce even a semblance of order into 
our industrial life. Ordinary statistical reports, whether Gov- 
ernmental or private like these of Babson or Bradstreet — were 
unable to put in order the confusion of disorganized production 
and distribution, and their forecasts were at best guesses with 
semblance of reason dependent on one condition : that the past 
tendencies will not be upset by future unforeseen influences.; 
These statistics of production and commerce are frequently in- 
accurate; firstly, because the data collected by private organiza- 
tions are in the most part incomplete; secondly, because it is 
often against the immediate business interests to make public 



i8 

such data the concealment of which may be profitable to some 
individual or group; thirdly, such elements as speculation, con- 
flicting interests of thousands of private producers and merchants 
step in and sometime render conclusion from incomplete data 
valueless ; finally, and this is the most vital condition, the prog- 
nostication may be reliably accurate only when mutuality of 
interests sets a definite task for accomplishment before each 
party. The experience of industrial crises and panics teaches, 
the lesson that they are caused chiefly by blind unorganized pro- 
duction, carried on without a knowledge of volume of supply, 
of sales, of demand for goods on the world market. Benefited 
by these lessons large manufacturers and merchants combine, 
join in trusts and rings, partly for the purpose of steadying prices, 
partly for the regulation of production guided by combined 
knowledge of probable demand and distribution of orders among 
themselves according to existing facilities to fill them at the 
lowest cost. The benefit thus accrued is not always to the 
advantage of the public as under such condition it is possible to 
maintain the prices at a higher level than if the manufacturers 
and merchants were engaged in a competitive struggle among 
themselves. 

When, however, the interest of all is supreme, as in the case 
of the Allies during the World War, those broader National or even 
International interests are taking precedence over the private 
gains. Production under such condition is carried on for the 
satisfaction of common needs, not for the profit of private in- 
dividuals, and the demand for a better working mechanism than 
the old-fashioned statistics has become imperative. 

The coordination of demand with supply and production con- 
trol in accordance with the task set on the basis of known 
requirements is the recent field opened for industrial administration. 
When it has been applied to munition production it not only in- 
creased production but enabled shifting of parts of orders from 
plants poorly fitted to ones better adapted; when used in con- 
nection with Emergency Fleet work it disclosed delays and in- 
efficient management in some yards from which the contracts 
were therefore taken away to prevent loss of "time and the peo- 
ple's money ; practiced in the Shipping Board it has revealed not 
merely unproductive loss of time by ships at docks and at sea 
but the fact as to what commodities are wanted, and where and 
when certain ships are ready to sail. 

The application of the same mechanism to labor problems 



19 

would help to eliminate unemployment and labor shortage; in 
railroading the opportunities are even larger than in naviga- 
tion; in public utility, the fuel problem, farming or any other 
activity the result can not fail to show once more that or- 
ganized cooperation even with the existing methods and facil- 
ities is capable of producing enormously greater wealth than it 
was dreamed could be produced. For the time being it appears 
that the main task of industrial administration is not to devise 
new appliances, not even so much to increase whatever degree 
of individual efficiency we have, but to learn how to make use of 
the productive means and forces we have already developed 
for the common good. 

That the new order of things can not come to existence with- 
out such an organ of information and that it would be inop- 
erative unless the proper working mechanism is devised was con- 
ceived nearly fifty years ago, although the chief hope at that time 
was laid on statistics. How clearly this was realized by an econo- 
mist the following passages may prove : 

"The principal thing to. ascertain is the number and the 
nature of the forces that are available, the quantity and the 
matter of the means of production, — the factories, the workshops, 
means of transportation and communication, land — and also 
their productivity. The next thing to ascertain is the quantity 
of supplies that are on hand and the extent to which those can 
satisfy the wants of society. As to-day the State and several 
municipalities yearly cast up their budgets that thing will then 
be done with an eye to all the wants of society. . . . Statistics 
here plays the chief role: they become the most important sub- 
sidiary science of the new era : they furnish the measure for all 
social activities." 

"If for instance the demand is statistically established for 
bread, meat, shoes, linen, etc., and, on the other hand, the 
productivity of the respective plants is equally known, the 
average daily amount of socially necessary labor is thereby ascer- 
tained (i. e., task is correspondingly assigned to each plant stat- 
ing how much product must be turned out daily). The figures 
would, furthermore, point out where more plants for the produc- 
tion of a certain article may be needed, or where such may be 
discontinued as superfluous, or turned to other purposes." w 

The unprecedented requirements for a speedy production and 
elimination of all kinds of waste spurred by the World War can 
not be diminished during the period of reconstruction and the 



20 

experiments carried out in a limited sphere of Governmental 
activities must of necessity be extended over the entire industrial 
world. Unless the League of Nations is established on a sound 
principle of economic cooperation free of tariff protection and 
limitations of export and migration of labor, the international com- 
petition will remain. In the world market that nation gets ahead 
soonest who sells cheapest and this can be done only by producing 
in the most efficient manner. In any event we are on the eve of 
a new industrial era toward which every day makes further progress. 
The changes of utmost social and economic importance are taking 
place often before the majority affected by them have time to realize 
their significance. There is, however, only one thing of which 
every thinking man is certain — that the new wine must not be 
poured into the old bottles and it is the task of the engineers to 
provide these new bottles — that is, the methods and tools that can 
serve the people best in attaining their highest aims. 



Chapter I 

THE POWER INDUSTRY AS AN ECONOMIC FACTOR 

THE wonderful development of the United States from the 
obscurity of a remote English colony into a dominating World 
Power is due to three main facts : conception of the idea of demo- 
cratic cooperation; realization of the paramount importance of the 
time factor ; and application of £0iver to save time and efforts so 
that the production of necessities of life will be rapid and easy 
enough to leave time to live and advance. 

Entire industrial activity depends on the sources of power. With 
the exception of an insignificant volume of work done entirely by 
hand, all production is dependent upon power driven machinery and 
with further development of automatic processes and equipment 
augmenting muscle power of men and animals, power generation 
will assume a still greater importance. Similarly, transportation by 
land, water, and air; communication by rail, wire, and wireless; 
hygiene, both communal and personal; comfort, safety, education 
and even medicine and art are becoming more and more dependent 
upon the power to render the gifts of nature of use in the service of 
humanity. 

The most spectacular and rapid industrial advancement of this 
country, out-distancing even our unparalleled opportunities in the 
agriculture, forestry, and animal husbandry, was chiefly due to the 
unlimited fuel deposits combined with other rich mineral resources. 
In other words, the abundance of conveniently available power made 
it possible to make this country what it is to-day. 

The whole progress of the last century both in mode of pro- 
duction and of living was made possible only after the man-power 
was replaced by the harnessed incarnate energy of the universe. 
Ox-plow was replaced by a power-tractor ; mule team and coach by 
steam and electric trains, automobiles and aeroplanes ; artisan's tools 
by modern automatic factory equipment. Small as it may be, the 
factory power plant or public utility central station is the life center 
of a community. Stop the supply of motive power and men with 
their machines are thrown out of their productive occupations, 
groping in the dark, frozen, starved, without means of communica- 

21 



22 

tion, impotent to conduct life according to the customary standard 
yet out of habit to live in the great-grandfathers' fashion. 

This changing of mode of production, notably since the time of 
Papin, Newcomen, Watt, and Stevenson and now continued by the 
nameless inventors employed by Edison and other entrepreneurs 
has indisputably resulted in an enormous increase of the productivity 
of labor. 30 While it is true that half of our productive equipment 
remains idle due to poor managerial methods or, more properly, due 
to our industrial and business system, while the other half is used 
only at something like half of its productive capacity, as frequently 
stated by most competent and well versed investigators, the fact 
that our industrial output of to-day is vastly larger than that of two 
or three decades ago, is chiefly due to the growth of industrial uses 
of electrical power. Reporting on the electric power supply in 
Great Britain, the Reconstruction Committee 81 stated: "In con- 
sidering the future it may, we think, be assumed not only that the 
output of industry will continue to increase, but also, that the use 
of mechanical power will, even more rapidly, continue to replace, 
or at least supplement, human labour. It is obvious that improve- 
ment in the commercial prosperity of a country — that is to say, the 
average purchasing power of the individual 32 — depends on increasing 
the output per head. If the wages be raised merely by increasing 
the selling price of the goods in the home market there is no real 
advance, and to increase the selling price of the goods in the neutral 
and open markets of the world is hardly possible in view of inter- 
national competition. The only way to increase prosperity is to 
increase the net output per head of the workers employed." That 
this increase of the net output per man is in some direct proportion 
with the use of power in industry seems to be well substantiated by 
our census as well as British data (see Chapter XI). The above 
mentioned report continues: "In the United States the amount 
of power used per worker is 56 per cent more than in the United 
Kingdom if we eliminate workers in trades where the use of power 
is limited or even impossible, we shall probably find that in the 
United States the use of power where it can be used is nearly double 
what it is here. On the other hand, not only are the standard rates 
of wages higher in the United States but living conditions are better. 
There is little doubt that in the United States the average purchasing 
power of the individual is above what it is in this country, and that 
this is largely due to the more extensive use of power which increases 
the individual's earning capacity. The best cure for low wages 
is more motive power. Or, from the manufacturer's point of view, 



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the only offset against the increasing cost of labour is the more 
extensive use of motive power. Thus, the solution of workman's 
problem, and also of his employer, is the same, viz., the greatest 
possible use of power. Hence the growing importance of having 



24 

available an adequate and cheap supply of power produced with the 
greatest economy of fuel." 

That the electric motor drive is the best known way of utilizing 
the power in industry and that electric traction particularly on trunk 
lines is the most economical means may be admitted now without 
bringing here argumentation of well-known facts and experiences, 
thus our problem is not so much how to apply and use power in 
industry and transportation but how best to generate the electric 
power. The successful solution of this problem, of efficient and 
economical generation of power, is therefore more than one of the 
industrial problems, more than a vital issue of the period of recon- 
struction — it is the foundation of future economic development of 
society. 

The widespread, extensive application of mechanical and electrical 
power to industries has so far exhibited two tendencies: increase 
of productivity and corresponding increase of wage-rate. The ques- 
tion often asked in this connection from both sides — capital and 
labor — is the same, though emphasis is laid on different phases of it. 
How will it be possible with the increased production to maintain 
the rate of profit and how will it be possible to avoid the periodic 
business depressions with co-incident unemployment? The an- 
swer to this is that we never had over-production but we 
had from time to time overtaxed the purchasing capacity of the 
majority of the population. We can not talk of overproduction 
co-existing with a large percentage of recruits whose physique is so 
undermined by bad living and working conditions as to render them 
unfit for the army, with underfed children of which we have school 
records, with charitable institutions having so much to do, with un- 
sanitary, crowded tenements breeding and spreading epidemics, with 
police and detectives guarding moral and private property, — for if 
it were actually an overproduction it would mean that more than 
all needs and wants are already satisfied. But the goods and com- 
modities remain uncalled for and unconsumed because the people 
have no money to pay for them and factories are closed to further 
reduce the output; this in turn swells the army of the unemployed 
that are forced by privations to underbid each other in order to 
secure any means of existence. In other words, the danger lies not 
in the increasing production by one means or other but in the system 
of distributing the product. Without any intention to be paradoxical, 
we must conclude that in order to do away with the ills of "over- 
production" we must still further increase production, so that through 
a large increase of productivity we could throw on the market a 



25 



tenfold or larger quantity of commodities. These must be sold and 
in order to be saleable, the price of commodities must be as near the 
cost of production as possible and the cost of production must be as 
low as the perfection of methods and elimination of waste can make 
it. The low-priced commodity readily finds a market as in the process 
of producing this commodity, a large number of workmen were 



h— 




272,500 



560,000 



2 



:t> 



290,000^ 

■a. 



217,000 g 



145,000 



72,500 



65 PerCent,- 

Wealth per Family,^ 725 Average. 



10,600- 
MOOPerCenT 



65 

-'-*j*~ 33 PerCent, 

Wealth per Fami laf 10,600 Average. '• 

2PerCeht,Wealth per Family! y 

$272,500 Average. 
Percentage of Population. 



Fig. 5. — Distribution of Wealth 
Computations have been made on basis of statistics of wealth and income to 
show the distribution of it among the groups of population. (Courtesy of J. W. 
Ledout and Engineers' Club of Philadelphia.) 

engaged at sufficiently high wages. Then, while the rate of profit 
might be still lower than before, the volume of business is greater 
so that the amount of profit is either the same or larger than before. 
Such falling rate of profit is actually observed in all industrial 
countries and the more developed are the trade and technical proc- 
esses, the more pronounced is the reduction of the rate of profit. 
The so-called industrial paradox, first discussed and explained at the 
International Congress in London in September, 1865, "that high- 



26 

priced labor may produce cheap, and low-priced labor may produce 
dear commodities, loses, therefore its paradoxal appearance." In- 
deed with highly specialized, complicated and expensive machinery 
the cost of production per unit manufactured drops as wages of 
the operatives raise, and the attempts to reduce wages has invariably 
resulted in an increased cost of labor per unit produced not to men- 
tion the enormous damages and losses caused by inexpert, indifferent 
usage of often delicate machinery by low-priced attendants. 

In the Transactions of The American Society of Mechanical 
Engineers 32 we find a highly important and as we all know a typical 
illustration of an enormous loss of productivity through mismanage- 
ment. Figure 1 gives another glaring example and picturesque ex- 
planation of why we produce less than we can and pay labor less 
than we should. That such an order of things tends to undermine 
the economic balance of the country may be seen from the diagram, 
Figure 5, based on the data of the United States Census representing 
the distribution of wealth per family. Mr. J. W. Ledoux in his 
presidential address at the annual meeting 1916 before the Engineers' 
Club of Philadelphia summed up the situation as follows : "Careful 
investigation show that the wealthiest 2 per cent of the people of 
the United States received almost as much income as the poorest 
50 per cent and own far more wealth than the other 98 per cent." 83 
Then again, the diagram Figure 6 shows the steady rise of prices of 
ten staple commodities based on the average price from 1890-1899 
taken as 100 — the authority for it is the Bulletin of the United 
States Bureau of Labor Statistics No. 114, April 4th, 1913. Such 
were pre-war conditions which might be termed "normal." These 
three illustrations show only too clearly the gradual deterioration of 
the purchasing capacity of the population. To expect that a return 
to these conditions after the war is either wise or safe would be 
folly. Yet, since the nightmare of the War is over, these conditions 
continue in the same direction. The increased productivity of labor 
with correspondingly increased buying and consuming capacity of 
the majority of the population is an issue that can not be dodged. 

In the course of economic readjustment the extensive application 
of power in manufacturing and other operations would play an 
important double part. Firstly, it means higher wages in industries 
using more power per workman than in those using little or no power, 
and secondly, it develops conditions, the escape from which is open 
in one direction only — increased production of cheap commodities 
co-incident with higher wage rates, and as this increases the purchas- 
ing capacity of the country and increases home-consumption, it grad- 



27 

ually eliminates the necessity of conquest of foreign markets by 
wars. The accomplishment of this program would not be possible 
without fully developed mechanism making such changes practicable. 
By this we do not understand the mechanical equipment, which 
has already attained a sufficient degree of perfection to produce 
the desired results if properly used but what we do mean is the 
method of the utilization of existing means and the economic rela- 
tions requiring this. These three elements are organically inter- 
connected — it is futile or even wasteful to have good equipment if 
the proper method of its use is not known but the best of method 
never could find acceptance unless the results are economically 
desirable. Similarly, the clearest conception of the economic problem 
requiring an immediate solution could not be of any practical value 
unless means and processes are at our command. 

Heretofore, the sales department, or contract or new-business 
department was considered the most important in industry as well 
as in public utilities, because the production was carried out primarily 
for sale, not for use or service. How efficient was the utilization 
of existing plants, how good were the methods, how satisfactory was 
the service and what effect it all had on the economic welfare of 
the community or the development of the country did not matter 
much so long as the sales were good and contracts were closed at 
a high price. If the plant was idle to a large extent, so much the 
better as it meant provision for new business, the overhead charges 
being borne by the customers in any event ; if the operating efficiency 
was low — it caused no concern, for the customer was charged for 
all the expenses incurred in production, whether they were neces- 
sary or not, and so if two pounds of coal were sufficient to generate 
one kilowatt hour but four were used, the company did not suffer ; 
it was up to the consumer to pay cost plus. 

During the war, a new criterion had to be accepted: not the 
sales, not the accountant's balance, but production. Was there 
enough power to run the industries? Was there enough coal to 
generate the power? How many kilowatt hours may be delivered 
from a kilowatt of plant capacity; how many more kilowatt hours 
may be generated per ton of coal, and similar questions gained in 
importance. Yet the methods were unfamiliar to those at the heads 
of the businesses. More output, more power meant for them merely 
purchase of more machinery; better economy was understood by 
them as installation of new, improved equipment. So one public 
utility company after another filed in line asking from the Govern- 
ment, the people's money for more plant, for better plant ; one asked 



28 

$20,000,000, another $15,000,000 and so on. It apparently did not 
occur to men accustomed to sell and speculate that there might be 
other ways than borrowing money when more goods are needed. 

It is truly astonishing how little attention has been paid to the 
matters of managing and operating the power plants. All that has 
been done, said or written was confined almost exclusively to a lim- 
ited field of improved equipment. Once the plant was equipped, it 
was assumed as a matter of course that the result will be commen- 
surate with the salesmen's promises. Three typical charts, Figures 
7, 8 and 9 show coal losses in poor, medium and fair plants. That 
the authority to invest the money involves the responsibility for the 
results was only too often forgotten; to take the pains of studying 
things over which one already has a measure of authority was 
frequently considered superfluous; besides we were in the habit of 
doing the things first and watching the consequences afterwards. If 
these were bad, we were quick to blame it on contractors, on em- 
ployees, on conditions, on anything but our own lack of thorough 
knowledge indispensable for mastering the production. 

Perhaps the weakest point in our industrial structure is our meek 
submission to the arbitrary power of those who possess things. For 
the reason of their having controlling financial interest in the enter- 
prise, they assumed the authority not only to dictate the policy but 
even to interfere with the technical details of managing the plants. 
When the man connected with financial institutions selects plans and 
specifications for equipment, chooses sites, contracts for supplies, 
fixes rates and wages, etc., the chances are at least equal that the 
interests of the community and the purpose of service will be ob- 
scured by other considerations. In this connection it is quite reason- 
able to place a great deal of responsibility for errors in judgment 
at the door of the accounting and statistical systems which generally 
overlook the facts of greatest importance for reaching a correct 
decision. That our accounting systems are devised to warrant the 
income on the title or investment and not to represent actual facts 
concerning the operation of the property and the value of the service, 
need not be proven here. The prevalent practice of valuation of 
the physical property renders simple but conclusive proof that claims 
for income are generally made on a basis of the money invested, 
irrespective of whether any good use is made of this investment or 
not. 

While the interests of the country, that is of the people, demanded 
not only an abundance of cheap power but the efficient operation 
of those plants which we already have, the engineer remained in a 



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Fig. 6. — Relative Prices of Commodities before the War 

The trend of increasing prices was also manifest before 19 14, from 1900 to 
1 9 13 the increase was 33 Yz % whereas from 19 13 to 1920 wholesale prices in- 
creased 138% and balanced retail commodities 101% while union scale of wages 
advanced 48%. 



30 

subordinate position, being forced to carry out plans and policies 
worked out often without regard to his knowledge. On the other 
hand, carrying on business on the competitive basis, many companies 
were unable to realize the advantages of cooperative service except 
through forcing the competing companies out of existence. 

The solution was thus sought not in engineering, constructive 
methods of pooling the resources and cooperatively rendering service 
to the community, but in the destructive practice of undermining 
the productive forces of competitive companies in order to gradually 
reduce them into submission and buy them out. This process of 
absorbing, merging, controlling, etc., financially weaker competitive 
companies resulted in securing many excellent physical advantages 
for these united public utilities, through more flexible systems bene- 
fited by greater diversity of load, etc., but the greater the financial 
advantages secured through this policy, the less important appeared 
the necessity for improved methods. On the other hand, virtual 
control of practically all sources of electrical energy in a territory 
served by one company, made its power dangerous, at least poten- 
tially, to the community and the public service commissions were 
created to compromise the interests of the public and the public 
utilities whenever they conflict, whether on the question of rates of 
service, or transportation, etc. Much criticism has been heard regard- 
ing official interference on the part of commissions in private enter- 
prises, as well as criticism of the leniency of some commission in 
favor of public utility interests. Both are inevitable for no com- 
promise could possibly entirely satisfy all concerned. More serious 
criticism aims at the principle itself but whatever the arguments are, 
the main weakness of public service commissions was in their indif- 
ference to the matters of national economy and technical, managerial 
methods practiced by public utility companies. It should always be 
remembered that whatever are the conflicts between the public utility 
company's interests there is not and there could not be any conflict 
between the interests of a local community and these of the entire 
country. From this broader point of view the interests of the 
people are identical with the interest of the whole industry, as the 
health, comfort, and prosperity of one depends on the well-being of 
all, yet narrow, temporary and selfish motives sometimes obscure 
this truism, while again, individual interests and aims are frequently 
in a direct contradiction (under our present regime), to the national 
objectives. 

Although nearly all large American cities are served with elec- 
tricity for light and power from systems well centralized, represent- 



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32 

ing a comprehensive whole, capable of fairly economical generation 
and distribution of energy, it is comparatively seldom that traction 
companies are cooperating in the joint use of their stations and lines. 
Such a measure is capable of producing many advantages in so far 
as combined equipment due to the diversity of power, lighting, and 
transportation peaks could jointly satisfy greater demand without 
duplicating individual capacity, offering simultaneously thermo- 
dynamic advantages of better load distribution and possibility of 
using larger units and correspondingly lower water rate and fuel 
consumption. Furthermore, use of substations, feeders, etc., on this 
basis is capable of reducing the overhead charges on some avoidable 
duplications. Such a cooperative plan if extended further would 
include hydro-electric stations, as in the case of the Mississippi 
River Power Company, selling electrical energy when available to 
the Union Electric Light and Power Company of St. Louis or of 
the Philadelphia Hydroelectric Company, the entire output of which 
is sold to the Philadelphia Rapid Transit Company. Not less impor- 
tant advantages may be secured from the cooperation of central 
stations with private plants whenever the discontinuation of such 
isolated plants is inadvisable, by using central station service during 
the periods or seasons when exhaust steam is not needed for manu- 
facturing processes or heating and relieving the central station peak 
load during much crowded winter peaks when the isolated plant 
may use its own electric-generating equipment instead of reducing 
valves on their steam-supply lines. 

Central heating plants in some instances could be similarly partici- 
pants of such a comprehensive cooperative scheme, all contributing 
very materially to the conservation of our fuel resources, relieving 
correspondingly a certain capacity of the railroads and contributing 
not only to the mutual advantages but to the prosperity of the entire 
nation. 

Carrying this plan farther, many hydroelectric developments that 
are possible are impracticable on account of industrially undeveloped 
surrounding territory. With electrification of trunk railroads or 
their sections undertaken as a part of national program of public 
work, these projects would become in many instances entirely prac- 
ticable and would contribute immensely not only to the conservation 
of fuel resources, but during the construction period would absorb 
a large number of otherwise unemployed men. Ultimately such 
electric roads would connect our ports of foreign commerce with 
interior producers by cheap and efficient routes, conserve fuel, reduce 
the expense of its transportation, make the use of poor fuels prac- 



33 

ticable and with all would facilitate export and develop the industries 
along the lines. Obviously an undertaking of such magnitude could 
hardly be carried out by private organization, but the timely prac- 
ticability of such comprehensive projects strongly suggest itself, 
especially considering the future reconstruction of railroads, neces- 
sity of new rolling stock, extensive impending maintenance and 
improvement of road-bed, etc., the cost of which is estimated at 
$6,000,000,000, still leaving locomotives only 5 per cent efficient and 
tracks working only 1 per cent of time. Electrified railroads show 
such decided advantages, that Belgium under competent leadership 
refused to rebuild war-worn railways without electrifying them, 
while Italy, forced by dearth of coal, is already a pioneer country 
in this direction, not to mention comprehensive and ambitious 
Russian projects. 

Whether we would adopt new principles or modify the English 
program for reconstructing power industry or pass a bill designed 
to provide for the national security by furnishing means for better 
utilization of the existing sources of electrical and mechanical power 
and for the development of new sources of power and "for other 
purposes"; whether we adopt the scheme of super-power stations 
or continue fragmentary extensions and new constructions "when 
and as" needed, we must remember that it takes longer to provide 
the sources of power than to extend the industrial demands for it. It 
hardly seems reasonable, however, in the light of our past experi- 
ences, to expect that private capital may unite on the scale essential 
for such a nation-wide plan and the public underwriting of utilities " 
may help to solve the problem of its financing. But whatever the 
form of ownership and control and whatever the extent of power 
application, the principles of administrative management and opera- 
tion will determine the success or failure of the undertaking. 

To satisfy this need of the nation for more and cheaper power 
in the best possible manner is clearly the paramount task of industrial 
administration. If the power industry is to be conducted solely for 
securing the maximum possible profit, many needs might be left 
unattended as their satisfaction may not be such as to bring direct 
or attractive enough returns to the privately owned enterprizes. 
In the case of isolated or factory plants such instances are not 
thinkable since such a plant is a part of the whole establishment and 
therefore its very existence depends on the satisfaction of all the 
demands, the satisfaction of which contributes to the success of the 
entire organization. This is not the case with a privately owned 
public utility, tramway, railroad, etc., serving a community, inasmuch 



34 

as they may find certain classes of service not sufficiently profitable, 
yet the harm done by such discrimination to some individuals, groups, 
activities or even to the progress of the community and the country 
does not necessarily or immediately hurt public utility owners and 
in fact such discrimination may be even temporarily profitable. 40 

To obtain for the community the maximum satisfaction and the 
best service it is essential that the interests of the community and 
those of the public utility be identical like those of factory power 
house and the factory itself. So long as they are not, various means 
are being tried to compromise their conflicting interests. Whether 
the Public Service Commissions and legislature or municipalization 
and nationalization of public utilities will solve the problem, is a 
question which we shall not discuss, but whichever will be the out- 
come of this issue, one problem must be solved immediately, namely 
this of efficient administration of the power industry. 

A true mastering of power production involves the develop- 
ment of fundamental principles embracing three main groups of the 
problem : 

First: as to what kind and form of power is required; what is 
the demand; what is the probable growth for each; where 
are the centers of demand and where are the centers of 
generation and distribution; and what is the best location 
and suitable equipment for meeting above requirements. 

Second: as to what kind of materials, supplies and other tech- 
nical requisites can best meet the requirements; what 
processes are involved and what methods should be adopted 

Third : as to conditions under which the men should be engaged 
— living and sanitary arrangements; mode and extent of 
compensation; working hours and nature of work; mutual 
relations, training and advancement, etc. 

In other words the whole problem reverts to the application of such 
principles and methods whereby the mastering of power production 
can be carried out for the common good of producers and consumers. 
A system of management is defined by Gantt "as a means of 
causing men to cooperate with each other for a common end. If this 
cooperation is maintained by force, the system is in a state of 
unstable equilibrium, and will go to pieces if the strong hand is 
removed. Cooperation in which the bond is mutual interest in the 
success of the work done by intelligent and honest methods produces 
a state of equilibrium which is stable and needs no outside support." 84 



35 

It is the conviction of the same writer that the industrial relations 
established "on the basis of democracy will yield as good, or better, 
results than those now in operation under autocracy." S5 

Autocracy in industry, as was stated in a public speech by a 
government agent 39 "must fail with the fall of the Hohenzollern 
dynasty. The same peace which frees the World from the menace 
of the autocratic militarism — should free it from the menace of 
autocratic industrialism as well." There can be no doubt that 
extremely large possibilities exist in the eliminating of the sense of 
irresponsibility as to the methods and principles upon which the 



Monday 
Tuesday 
Wednesday 
Thursday 
Friday 
Saturday 
Sunday 

Week 

Ending 
8-15-16 



■I ; ,,'1 



K2. 



22^. 



zrnrn 



mmL 



486775 POUNDS 



BBBBaa Coal used a+ Standard E[ 
W////////A Coal used in excess of 



33d 250 POUNDS WASTED 

•777777, W;/fy77777, W/»fy»M>//»//>J.W?7. 



41 PER 
7Z *-CENT- 
L055. 



100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,0001 

Poynds 



Fig. 7. — Coal Waste in an Average Plant; 41% 

Average plant under slipshod management, without instruments, training, 
records and rewards wastes 40% or more of fuel used. (Composite diagram from 
author's practice.) 

production is carried out. The revenue producing factor is not the 
investment but the method of its use, 23 whether this revenue is 
reckoned in terms of dividends paid to the share-holders or in the 
added welfare of a community and prosperity of the country. 

Success or failure in mastering production determines the future 
development of society, rise and fall of nations, the form, the order 
and the ideals of our relations. Upon those who are called to 
organize, plan, direct, and control production, depends whether in- 
competency, privilege and autocracy, heretofore supporting such a 
state of affairs, or efficiency, industry, and cooperation will lead us 
to a higher form of social order. 

Yet even superficial observation shows us how true is the old, 
and well-known statement that "in the social production which men 
carry on, they enter into definite relations that are indispensable 
and independent of their will; these relations of production corre- 



36 

spond to a definite stage of development of their material powers 
of production. The sum-total of these relations of production con- 
stitutes the economic structure of society — the real foundation, on 
which rise legal and political superstructure, and spiritual processes 
of life. No social order ever disappears before all the productive 
forces, for which there is room in it, have been developed, and new, 
higher relations never appear before the material conditions of their 
existence have matured in the womb of the old society." 

Heretofore no management that could produce the most goods 
was needed; in fact it was feared that the condition would arise 
making it impossible to sell them at a high price; likewise the effi- 
ciency of management was a thing much talked about but never 
seriously practiced as far as national production was concerned, for 
the economic system was based on waste. 

Recently, the Emergency Fleet Corporation was obliged to take 
away much needed shipbuilding contracts from some firms that had 
too boldly practiced their "right" to waste time, materials and to mis- 
manage production. Mr. Redfield, Secretary of Commerce, said 
that we are a wasteful nation. He said it was all a matter of char- 
acter. He called attention to the fact that 65 per cent of the value 
of the tree is wasted in making lumber. But Mr. Redfield ought 
to know that waste was the ground plan of our system; that it was 
not a matter of character at all except of the character of our busi- 
ness system. It pays best to waste forests, as it pays best to waste 
coal and food and such other stores of nature. In the greatest of 
all wars we lost something less than 50 per cent of the number of 
people which our system found profitable to kill and maim annually 
in the steel mills, railroads, and elsewhere through industrial acci- 
dents. "It is called a good business to take off cream and throw the 
rest away. From the view point of the investor it would not be good 
business to turn the engineers and masters of production loose to 
save and serve the people to the best — even their advice is seldom 
asked, for Waste is the System." ** 

The grave question now is : shall we carry out our reconstructed 
industries on the same basis that has been the foundation of 
our old business system — waste? "It did pay to waste human life 
and health, for those killed and invalided by industries were replaced 
by European immigration without expense. It did pay to waste 
natural resources and materials for the waste of production has been 
shown as a legitimate part of cost of production and we charged the 
customers for the coal and commodities thus saved. It did pay to 
waste time in idle machines and idle capital for we devised a plan 



37 

whereby the consumer had to pay for it. In other words the busi- 
ness system succeeded to make profit out of any kind of industrial 
waste. That is why efficiency in the past could not become a part 
of business policy," said a speaker during the discussion of H. L. 
Gantt's paper Efficiency and Democracy at the Annual Meeting of 
The American Society of Mechanical Engineers in 1918. 

Our production was inefficient because we aimed to sell com- 
modities dear; our organizations were unfit for production for we 
planned to make fortunes by speculation, not by producing com- 
modities ; our knowledge was superficial as we did not have to know 
much to plunder our natural resources. Our speculative boosting 
up the prices overtaxed the buying capacity of our people, so that in 
order to maintain business we had/to export, but the other nations 
also had to export and, when there are no more open markets, indus- 
trial wars follow. The wars further tax people, reduce home-con- 
sumption of goods and increase prices and the people revolt against 
the system that makes commodities dear and men cheap. Such an 
economic system contradicts itself, it destroys itself from within, 
it creates excesses and offers no solution. Yet the new adjustment 
of economic forces can not take place without a new mode of 
mastering production and so the new principles and methods must 
be developed and practiced. 

We paid dearly for these lessons. Idle men were to be fed, and 
those who worked hard had to share with non-producers; idle ma- 
chinery was to be paid for and the reduced output bore extra charges 
for this, sending the prices upward ; wasted coal caused untold misery 
last winter ; wasted material was included in the price of marketable 
commodities; mismanaged rail-roads have thrown men out of work 
for ten Garfield days and announced "embargoes." Mismanaged 
electric companies hampered the production of the most needed goods 
by shortage of power they were unable to generate, and millions of 
dollars had to be given to them by the government to put them on 
their feet. 

Even if we did not know what cooperation means and how pro- 
duction could be carried on for the common good, we should have 
been incredibly stupid not to benefit by these lessons. So we took 
under Governmental control, railroads, shipping, express companies, 
telegraph, shipyards, aircraft production, distribution of food, steel 
and some other commodities, but we did not get the cooperation. 
What we got, proved to be vastly better than an individualistic, 
anarchic scramble for individual gains and muddling with things. 
But cooperation was simply sidetracked and substituted by co- 



38 

ordination. And this means regulation from a central office without 
any assurance that the orders are not arbitrary. Coordination is 
a man-made law ; cooperation is based on the laws of nature. One is 
decided by debating mere opinions while the other is based on facts. 
One is the way of lawyers and politicians — the other the method of 
engineers. You may debate and take votes on prohibition, but you 
can not order alcohol to become non-intoxicating. 

The shortcoming of any enforced coordination is that it may be 
arbitrary. As such it may or may not be for the common good, 
indeed it might be used to develop new forces of oppression and 
exploitation. Democracy proved itself superior to Autocracy; coop- 
eration has to prove its superiority over coordination. 

The manager, management engineer or whatever name may 
be used has to formulate the policy of mastering the production, 
consistent with the fundamental principles or natural laws of 
social development, as opposed to mere conformity with his 
personal view or fancy as to "righteousness," "legality," "tradi- 
tion" or what not. As the word itself indicates, the management's 
function is coordination of man's efforts and as such it involves 
conservation of men's efforts by 

1 Best procurable living conditions 

2 Highest degree of hygiene 

3 Broadest education 

4 Vocational fitting 

5 Study of science involved in industrial process 

6 Acquiring skill in operations 

7 Fixing the useful habits 

8 Making work fascinating 

9 Minimizing dangerous and manual labor 

10 Increasing production per time unit 

11 Minimizing working hours 

12 Providing for productive relaxation. 

When these elemental requirements are complied with, the com- 
plex requisite of industrial economics — this of maximum production 
with minimum effort is fulfilled. 

This requisite of paramount importance opens a new field 
for engineers. "War conditions have not only hastened public 
recognition of the engineer as an expert in applied science and 
fostered solidarity of the profession, they have also opened to him 
new fields of activity," says an eminent investigator. "Back in 



39 

1914 most people believed that the war could not last long be- 
cause enough money could not be found to finance it. But three 
years of experience have made it clear to everyone that although 
money is plentiful, it is usless if there is nothing to buy; so 
that winning the war depends on increasing production by an 
amount which has been estimated as the output of at least ten 
million additional industrial workers. This extra production 
may be secured either by training more workers or by increasing 
the output per worker by engineering methods. Hence, there 
has arisen a pressing demand for men who can deal with labor 
and with business administration in the engineering spirit. This 



Monday 

Tuesday 

Wednesday 

Thursday 

Friday 

'•Saturday 

Sunday 

Week 

Ending 

t-13-16 























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■PERCEN1 
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1200 



1400 



1600 



1600 



Z000 



Fig. 8. — Coal Waste in a More Careful Plant; 34% 
About one third of coal is lost in power plants receiving ordinary managerial 
attention as to upkeep and having a few instruments casually installed. . Some 
10% of coal could be saved by such superficial means. 

demand is further emphasized by the fact discovered by the 
Federal Trade Commission, that only 10 per cent of the manu- 
facturers in the United States know their actual cost of pro- 
duction. The determination of these costs requires a scientific 
study of production which only an engineer can make. This 
work involves the analysis and apportionment of overhead ex- 
penses, and thus leads at once to such fundamental questions 
of economic justice as : Should the capital invested in idle ma- 
chinery be paid wages, though idle workingmen are not? 

These new opportunities for the engineer have been gradually 
developing for a number of years, but the profession as a whole 
has been slow to discern them. The war has focused attention 
on them and precipitated a general recognition of them. It is 
also evident that the mastery of these new activities depends in 



40 

greater measure than does the mastery of the traditional types 
of engineering on the personality of the man." 88 Add to the 
above requests put up to industrial administrator or manager the 
definition made by an English unionist that "the works manager 
is out for fullness of life, just as much as is the poet" 39 and his 
task is fairly complete with one important modification : that by 
fulfilling all this he infringes no human right. 40 

The control of resources, of means of production, or even of 
political power is of no avail whatsoever unless the productive 
forces are so directed and organized that the new industrial 
relations shall better serve large masses of people. It is the 
knowledge and the ability to do things that assumes the natural, 
intrinsic authority and leadership. 

It is inevitable, therefore, that the industrial administrators, 
pre-eminently the engineers — are alone capable of mastering 
the complex mechanism of modern life in motion. The old 
masters of static things have no function in the modern dynamic 
society. The new leadership cannot be either autocratic or arbi- 
trary, for dealing with the laws of nature, with intrinsic laws 
of life, not with man-made laws of barristers, it can neither 
alter nor misinterpret them. Where errors spell annihilation, 
there is no room for theories and opinions, whims or desires. 
Action must be taken on the basis of the knowledge of facts; 
hence those who know what to do and how to do it must 
assume the leadership; their authority, being based upon the 
knowledge of facts, can not be questioned, disputed or denied 
any more than the facts themselves. This authority is not 
conferred on them by vote nor is it taken by force — it is theirs 
so long as it serves humanity in its quest for life and happiness. 

In the coming order of things the success of industry will 
depend on a maximum of production with a minimum of effort ; 
improvements will be measured by hours saved from toil for 
enjoyment of life. Stability of industry will be reckoned in the 
stability of occupation and will depend upon the quality of the 
product. Quality is wanted but will be measured in terms of 
longer service of goods in relation to the time required for 
their production. Wages should adequately provide for the 
fullest known measure of healthy, happy life and reproduction. 
No undertaking will be tolerated unless it be safe, healthy and 
pleasant. For dangerous service only volunteers will be accepted. 
Output will be determined by actual existing need for the product 
by all people, not by their purchasing capacity. Idleness will be 



4i 

brought into disrepute for it breeds parasites, for it imposes on 
society extra burden whether it be idle land, idle men, idle 
machinery, idle buildings, capital, or idle knowledge and talents. 
Industrial relations will be based on fullest cooperation. This 
plan can not work under arbitrary, incapable leadership — it pre- 
sumes that it is definitely known in every instance what to 
do and how to do it. 

In the course of the following chapters on the mastering 
of power production we will try to show, by the examples of 
one particular branch of production, even though the manu- 
facture of power is and always was pre-eminently the domain 
of engineers, how considerable is the waste caused by incoordi- 





















s / 
















JunelfS. 


































BEK3 




June V& 
June 3— 






























































June 4^k 
































June 5^ 
































June 6& 












i 






















































June 7™ 








Week June 
1915 


26. 


55 TO 


IS PR 


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SB, 


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13.4 f 


tRCEUT 
LOSS 



500 



1000 



1500 " 2000 
" Tons. 



-2500 



3000 3500 



Fig. 9. — Coal Waste in a Systematized Plant; 18.4% 
In plants well "systematized," equipped with necessary instruments, keeping 
records and caring for ordinary maintenance losses are below 20%. This waste is 
due to lack of scientific studies and training and chiefly to the force disinterested in 
results of their work. 

nated, arbitrary ruling of managerial problems. We restricted 
the scope of discourse within the walls of power stations, 
formulating and illustrating sound principles of management 
guided by studies of facts and animated by a desire to apply the 
knowledge for the benefit of all, not of few. Difference of 
opinions has no room where facts are established and experi- 
mentally proven. Similarly no conflict of interests may be ex- 
pected wherever the welfare of all is supreme; hence the ful- 
lest cooperation may be expected only in establishments con- 
ducted on the basis of full knowledge of facts by all concerned. 
Any system of management upon final analysis appears to 
be merely a mechanism. As of such, good use or poor use may 



42 

be made; as any tool it may be applied to a right or wrong 
purpose and so long as "scientific management" or any other 
form of management is applied as a panacea for boosting the 
dividends, it not only falls short of accomplishing its social func- 
tion, but to the contrary, creates friction and further antagonizes 
interests of benefited and benefactors ; yet no definite aim can 
be achieved without proper mechanism and the scientific method 
of controlling the production seems to be particularly and admir- 
ably fitting for the aims of social mutuality of the coming in- 
dustrial democracy. What we mean here as a mechanism is, 
of course, not an agglomeration of "short cuts," stunts and uni- 
versal remedies for this and that industrial ill and waste, but 
an organically whole philosophy of industrial cooperation for 
production carried for the common good. Real mastery of pro- 
duction presupposes a profound knowledge of science involved 
and technical experience, but it cannot be practiced success- 
fully in an arbitrary, dogmatic fashion. No authority of those 
directing the production is capable of justifying the issuance of 
an instruction calling for dilution of acid by adding water, yet 
in dealing with human relations, orders sometimes unhesitatingly 
are issued and enforced that are fraught with equally dangerous 
consequences. 

The conservation of fuel cannot be brought about by orders 
and appeals, nor by compulsory or voluntary installations of 
fuel saving devices and improved machinery. Desire to save 
fuel on the part of those who actually use it is insufficient unless 
supported by a knowledge superior to the one prevailing. Special 
care, attention and extra efforts are capable of producing little 
unless means are provided to watch the results, yet monthly 
compilation of statistics in a centralized bureau seldom shows 
"why" the loss occurred to those who cause the waste whether 
through ignorance, fatigue, or managerial handicaps. More- 
over, long working hours, low wages, employ of untrained men, 
low intelligence, etc., must be done away with before the fuel 
conservation may be seriously attempted. Similarly all the coal 
saving devices and appliances may improve results only if properly 
used, while if neglected, misused or abused, they cause a direct 
harm by wasting labor and material for the manufacture of those 
devices which are not properly used. Automatic equipment and 
apparatus are in fact frequently worse than none, since depend- 
ence on their work and regulation promotes a sense of secur- 
ity and care-free spirit with a common consequence of addi- 



43 

tional losses "coming and going" with each variation of furnace 
and load conditions, while, again, an endless number of examples 
proves the superiority of an intelligent manual regulation. All 
this, of course, applies only to the average cases and does not 
imply the abnegation of intrinsic values of such devices and 
improvements, which simply fail to serve the incompetent users. 
National campaign for fuel conservation will fall short of desir- 
able results unless every individual plant earnestly and untiringly 
studies its problems and seeks and follows competent advice 
of those specializing in the art and science of mastering power 
production. 

Let every plant owner or manager frankly answer to himself 
the following questions and then act accordingly : 

1 How many pounds of steam or kilowatt hours are actually 

produced with one pound of coal on the annual or 
monthly average ? 

2 How many pounds of steam or kilowatt hours one pound 

of fuel is capable of producing in the existing equipment? 

3 To what is this shortage due? 

4 What this loss amounts to per year? (In dollars to the plant 
and in tons to the country) 

5 Do the employees know how better to utilize fuel? 

6 Are they willing to learn? 

7 Who can show them and help them? 

8 Is all the generating equipment productively used? 

9 Is all the power generated productively used? 

10 May purchase or sale of power improve fuel economy? 

Such a questionnaire may be elaborated extensively but in a pre- 
dominating majority of cases no answer to the first question is 
to be had, and whenever this is the case, the efficiency of boiler 
operation generally is in the neighborhood of 50 per cent and 
the fuel losses are usually over 20 per cent. 

The Connecticut Committee on Fuel Conservation did not 
hesitate to state that "it practically amounts to treason to 
waste coal," yet, without cooperation between plant manage- 
ment and fuel and power experts no better results may be ex- 
pected than from an army where every soldier feels at liberty 



44 

to carry or not the plans of the general staff. Unbiased and 
competent investigators, after due tests and studies, can correctly 
determine for each plant under observation what amount of coal 
is reasonable allotment and the principle suggested to the United 
States Fuel Administration at the annual meeting of The 
American Society of Mechanical Engineers a in 1917 was to 
abolish the privilege to waste fuel in inefficiently conducted plants 
by giving priority in coal deliveries to those who prove that they 
do use it efficiently. This principle took a definite form of rating 
plants into five classes so that the needlessly wasteful ones 
should be the last to draw upon the available supply of fuel. 
Now, suppose that the most extravagantly wasteful plant furn- 
ishes power for the most needed public purpose, transportation 
or manufacture of important commodity. To leave it without 
fuel supply may amount to a calamity ; leave it alone because of 
importance of its function means to protect waste, incompetency 
or what not. The autocratic way would be to choose between 
the two and thus cause public loss to the country one way 
or another ; as opposed to this, a truly democratic way is to offer 
cooperation, "call for a doctor," and by a careful study of causes 
establish the procedure for elimination of losses. Study of causes 
of inefficiency discloses a more economical way to manage the 
plant and the plant should have the benefit of such disclosure. 
If the management is unwilling or unable to do better, it is not 
a remedy to close the plant and thus reduce the productivfe 
capacity of the country. Selection of more competent manage- 
ment is in such extreme cases a solution capable of satisfying both 
fuel conservation and unhampered production. 



Chapter II 

THE LOCATION OF PLANTS 

THE effect of a plant's location on the value of the service it 
renders to the community as well as on economic development 
and industrial expansion of the neighborhood is a question which, 
though attracting some attention in the past, has never been ade- 
quately met by a comprehensive large-scale development. Individual 
surveys and examinations were of course made in every case of 
building a new plant, the thoroughness, accuracy and impartiality of 
which varied in every instance, but these new developments or new 
constructions were made with a view of taking advantage of the 
existing field of activity or reasonably certain prospects rather than 
of giving an opportunity to the locality to develop and progress. 
Furthermore, where a need for a new or larger plant exists it is 
common to find that a territory offering such opportunity for a private 
enterprise is divided and served by a number of independent, some- 
times competing companies which spend more energy, time and 
money in competing with each other than in rendering service. The 
inevitable consequence of this is that the community does not get 
as good or as economical a service as it might if all the efforts 
and expenditures wasted on competition were wisely directed for 
cooperation. Eventual unifications of a number of small compet- 
ing companies inherit besides the indebtedness of the previous period 
a number of small, scattered plants, substations, etc., which are 
quite below in their efficiency of what might have been possible if a 
large unit central station were erected originally in their stead. The 
community that cherished an idea of benefit derived from competi- 
tion of divided interests is finally bearing the brunt of accumulated 
burdens both financial and those resulting from engineering dis- 
advantages and pays the penalty for permitting duplication of efforts, 
low efficiency, and narrow vision. 

Upon the analysis of many such situations both in this country 
and abroad, the problem of location and the size of the plant appears 
in all its importance, as far as public interests are concerned. It 
may be best reviewed if its effects are considered separately as those 
affecting the service and those influencing the conservation. 

45 



4 6 

Service Requirement Upon Location 

The most commonly recognized rule regarding the location of a 
central station is that it must be situated as near as possible to the 
center of distribution. Such location permits the shortest lines from 
the generating stations to the periphery of the territory served with 
attending minimum drop of voltage and line disturbances. While 
this is particularly true with direct-current service, it is also correct, 
though not equally important, in cases of alternating current, as it 
may be comparatively economically transmitted over almost any 
distance chiefly because of the simplicity with which the voltage 
may be stepped up or down. The beneficial result of locating the 
generating station at the center of distributing system is quite evident, 
though among other things we may note: smaller liability of inter- 
ruptions on shorter lines; any accident affecting fewer customers 
than it would if on a longer transmission line ; a steadier voltage, 
which for some industries is a very important factor, etc. 

The aim of the centrally located generating plant must neverthe- 
less be carefully studied in the light of other considerations such as : 
probable direction of growth of electrical demands; convenience of 
obtaining and maintaining the right of way and distributing lines; 
possibility of future enlargements ; possibility of tying with other 
generating plants in the vicinity and, of course, economy of opera- 
tion and other considerations discussed later. Again, while under 
some conditions the private ownership may find unsurmountable 
difficulties preventing the locating of the plant in a most advantageous 
place — such as unbuyable real estate, legal obstacles, too large an 
initial money outlay with remote date of earning dividends, etc., — 
with public undertaking of such development these handicaps may 
easily be overcome and outweighed by ultimate advantages to the 
community or even to the nation. 

On the other hand, the nature of the requirements for one kind 
of current or another must be taken into serious consideration in 
determining both the kind of current and location of the generating 
plant in relation to the distributing system, which may be well 
exemplified in case of electric traction. Furthermore, the industrial 
communities not infrequently offer good opportunities for locating 
a generating plant in that vicinity while residential communities may 
strongly object to a power plant in the neighborhood. The British 
Reconstruction Committee concludes in this connection that "the 
health of the great industrial centers and the congestion of the 
railway lines in their neighborhood would be radically improved by 



47 

arranging for the conversion of coal into motive power to be carried 
out away from the densely populated centers." (20-2 ) 81 

Thus a few outstanding considerations regarding the proper 
location of a generating plant from the viewpoint of service are: 

a Minimizing line troubles and interruptions through radial 
distribution from a centrally located plant instead of diag- 
onal branching off lines from the plant near the edge of the 
area served 

b Reduction of disturbances and interruptions of service by 
locating the generating plant so that minimum number of 
substations will be required 

c Avoiding as far as possible periodic or temporary drop of 
line voltage necessitating costly regulation or causing dam- 
age to manufactures served 

d Possibility of interconnection of plant with other plants or 
preferably hydroelectric stations 

e Possibility of enlargements or extensions as the service may 
require 

/ Assurance of uninterrupted delivery of fuel, water and other 
materials and supplies insuring uninterrupted generation 

g Attractive living neighborhood or convenient communica- 
tions for employees preventing disturbances on account of 
difficulties of securing operatives and minimizing tendency 
to high labor turnover 

h Ground suitable for stable foundations further assuring un- 
interrupted operation. 

While the above conditions are essential for the selection of a site 
suitable for a plant from the standpoint of reliable service, a number 
of other requirements are no less important but they are so closely 
linked with these necessary for economical operation that they belong 
to the next group of consideration. 

Conservation Requirements Upon Location 

Steady reduction of the cost of electricity to the consumer up 
to the time of the World War was made possible chiefly by inventors, 
designers, and builders of equipment, in spite of the muddling with 
the methods of its use. Three factors deserve mention in this con- 
nection. 



48 

First, direct current with its limited sphere of distribution was 
replaced by high-voltage alternating current which made possible 
the generation of power in large central stations with corresponding 
commercial advantages of mass-production with comparatively insig- 
nificant transmission losses. Second, as a direct consequence the 
advantages of large central stations stimulated the design and con- 
struction of large size turbo-alternators of high thermal efficiency, 
made profitable installations of large boiler units, double-end fur- 
naces, and similar developments. Still further advantages were se- 
cured from the wide range of characteristics of the connected load 
with its diversity factor, off-peak load, etc. This made possible to 
serve a cumulative connected load far in excess of the plant's own 
capacity. Lastly, mass-production of steam with corresponding great 
amount of coal and ashes to be handled promoted the development 
and adoption of automatic stokers, coal and ashes handling machinery 
and use of measuring and controlling instruments. This semi-auto- 
matic, centralized mass-production besides evident advantages in 
marketing the product, permitted, even made it imperative, to employ 
highly specialized operators in place of cheap but inefficient laborers. 

This evolution tends toward the discontinuation of small sized, 
scattered, inefficient plants and substitution by large central stations 
or even so-called super-stations. This obviously does not include 
those factory plants, industrial and institutional power plants where 
electricity or mechanical power is merely a by-product of steam which 
is used in manufacturing processes, for heating, boiling, cleaning, etc., 
as the most economical central station service can not begin to com- 
pete either in fuel economy or in cost with steam-electric generator 
acting primarily as a reducing valve and only incidentally delivering 
the current. Moreover, of all the physical conditions permanently 
affecting the economy, the location of a plant is a most serious one 
since it is practically unalterable. The most influential of these local 
conditions are those in relation to 

a Fuel 

b Water (for boilers and condensers) 

c Labor 

d Transportation 

e Neighborhood 

/ Population 

g Legislature 

Inasmuch as fuel is the most important factor both in expense 
and in the efficiency of any steam or other thermal power plant it is 



49 

evident that — (1) sufficient supply of fuel and (2) minimum haulage 
or transportation are the conditions of greatest importance and while 
it is desirable it was not always practical to locate plants at the mouth 
of the coal mine or in the middle of the oil field, those plants that 
pay less for fuel transportation have economic advantage, as well 
as being more desirable from the national view point of conserva- 
tion of efforts. Closely related to this point is the adaptability of 
the furnaces for the local fuel supply, while in locations distant 
from any coal field the advantages are on the side of one which can 
use fuel delivered by waterways or, if the coal is to be conveyed by 
rail, it is more desirable to bring the coal lowest in ash and moisture 
in order to reduce the transportation of refuse. Furthermore, the 
location of the plant at the navigable water front or on the railroad 
offers more advantages than the one requiring extra hauling or even 
carting of fuel. This fact is so obvious that it is often forgotten 
when intricate considerations of a few extra miles of transmission 
lines or economic advantage of certain real estate complicate the 
issue. 

As the result of the location of a plant relative to the price of fuel 
the type and character of the auxiliaries and even main units that 
would be advantageous in one locality may become extravagant 
luxuries in another. For instance: thermodynamic advantages of 
electrically driven auxiliaries, economizers, etc., with the cheap coal 
used may not save enough in fuel to cover the excess of fixed charges. 

Water supply follows closely in its importance upon the fuel in 
affecting the operating cost and safety of the plant. Water supply 
bears upon: 

1 Water power available 

2 Abundance at all seasons for boiler feed 

3 Scale forming qualities 

4 Sufficiency and suitable temperature for condensation 

5 Drinking qualities 

6 Electrolytic action 

7 For by-product extraction and electro-chemical processes, etc. 

It is altogether desirable to provide every thermal power plant with 
at least a small source of water power. The advantages of such 
combinations are large and important considering the expenses for 
banking extra boilers, carrying peak loads, maintaining reduced 
service during accidents and disturbances, etc. Ample supply of 
water for boiler feed is of course imperative and plants depending 
merely on the city water supply are at times in a precarious condi- 



So 

tion (especially in small communities) not mentioning usual high 
rate of water purchased. Again, the quality of the feedwater deter- 
mines the desirability and advantages of sometimes large investments 
in water purification or softening plants with their permanent oper- 
ating and maintenance expenses. Moreover, the character of the 
feedwater affects very largely the life of the boilers and boiler tubes 
besides necessitating extra investment for spare boilers needed during 
frequent cleaning outs and expenses connected with the removal 
of scale, change of gaskets, etc. 

Water for condensing sometimes determines the entire specifica- 
tion for generating equipment. While non-condensing engines and 
turbines are less economical in operation than condensing, certain 
factory power plants could gain nothing from the use of more 
expensive condensing installations. The quality of the water for 
condensation again often severely affects the cost of maintenance 
on pumps and condenser tubes, while the lack of water or its high 
temperature sometimes warrants heavy additional investments in 
cooling ponds, towers, sprays, etc. 

While the two above physical conditions of the locality in which 
the plant is situated materially affect both the character of the equip- 
ment best suited, the operating cost and the fixed charges, the labor 
market and the living conditions in the locality have perhaps a still 
more direct influence on the managerial problems. Too little atten- 
tion has been commonly paid to this vital question. Away from in- 
dustrial centers both skilled and common labor is not readily obtain- 
able, and living conditions for men are sometimes unattractive. 
Economical disadvantages of shifting personnel are more pronounced 
in power plant work than in any other industry since a new-comer 
has more to learn about local peculiarities of plant, equipment, mode 
of operation, etc., than any skilled mechanic in any industry when 
he changes his place of employment. 

The managerial problems under such condition become more 
exacting — all operations should be clearly and definitely standardized, 
written in plain language, instructions prepared and personal train- 
ing provided in a systematic way. It is not so much the problem of 
hiring fit men as it is to make the men hired fit the job and the 
magnitude of such a task can be appreciated only by those who 
have had the opportunity to actually solve it. 

As a remedy for the disadvantages of local living conditions, the 
building of a colony for the employees at a considerable investment 
should sometimes be resorted to and under still other circumstances 
the employment of reserve men or understudies helps to solve the 



Si 

problem. While these men regularly have little to do but learn and 
keep themselves in readiness in cases of sudden sickness or absence 
or resignation of the employee, especially one holding a licensed or 
skilled responsible position, the ready, available substitute is inval- 
uable. 

Again, the school for the employees' children, shopping facilities 
and prevailing prices of produce, rent, recreation facilities, in short, 
everything that determines the cost of living, standard of the com- 
munity, etc., should be taken into account as it in turn is reflected 
in the rate of wages and stability of employment. Furthermore, 
social environment, churches, clubs, class of neighborhood, climatic 
peculiarities, etc., sometimes make otherwise desirable positions hard 
to fill. As the result of operating efficiency and economy hinges on 
the personnel, in the last count, the influence of local conditions on 
the possibility of securing and retaining high class, efficient operating 
men shall not be underestimated. 

Transportation facilities, both passenger and freight are closely 
linked wtih the above discussed local factors. The need for a 
satisfactory means of receiving an adequate and uninterrupted sup- 
ply of fuel and other materials is readily recognized, especially where 
considerable fuel storage is not practicable or even possible. More 
than one route for deliveries always puts the plant into a more 
secure position particularly if one is liable to be crippled during a 
certain season of the year. No less importance should be attached 
to the passenger traffic, in fact it is more important if the employees 
are living at some distance from the plant. Well arranged schedules 
of trains and trolley service and cheap fare or special commutation 
tickets play an important part in the security and economy of the 
plant operation. 

Lastly, the local conditions, habits and social environments deter- 
mine the working hours, length of shifts, rotation of watches, etc. 
While in general most economical operation can be maintained with 
four six-hour shifts in twenty-four hours, the interplay of various 
local conditions makes it extremely difficult to put these into practice. 
Similarly local conditions at times may influence the mode of com- 
pensation, being either favorable or hostile to bonus payment, mak- 
ing it necessary to pay at certain days, more or less often, in 
order to offer the employee the advantages of late evening shopping 
or to meet the terms of local storekeepers' credit settlements, etc. 

The more or less thickly populated neighborhood and its charac- 
ter exercises a great influence on the character of equipment and 
mode of operation of a central station. It has a still more pronounced 



52 

effect on the method and equipment used in the transmission of 
current. Closely related to this is the direction and the rate of 
the growth of the community served. High-tension transmission, 
net of substations, underground or overhead lines and allied matters 
do not directly relate to our subject, yet indirectly, through factors 
such as power factor, extent and time of peak loads, diversity factor, 
greater or lesser importance or voltage regulation, etc., are the local 
factors of utmost importance for successful mastering of power 
production. 

Legislative regulations as a rule are very unlike in different, 
sometimes neighboring, states and frequently offer serious problems 
in management. While one plant can not employ any but licensed 
firemen, the one within a stone's throw is safely operated by men 
without a tag but with real knowledge. The endless variety of 
regulations devised by lawmakers for reasons which sometimes are 
obscure to themselves and seldom beneficial to the community, shall 
be omitted from this discussion until the engineering profession gains 
the standing belonging to them as creators and masters. 

This brief outline of the few most conspicuous local factors 
should be sufficient to prove that neither methods nor economic re- 
sults may be alike in two plants subject to the influences of different 
surroundings. 

Centralization of Plants 

From the preceding review of the influence of the location of a 
plant on the character of service and economy of operation a con- 
clusion may be drawn that every suitable locality should be utilized 
to the fullest extent. Now the question to answer is what might 
be the advantages derived and accruing from centralization of elec- 
tric generating facilities, serving economically a large territory and 
how large this territory might be or how far centralization should 
be carried. 

It has been generally accepted that the concentration of generating 
equipment offers the following advantages : 

1 It is possible to distribute the power economically 

2 Because of diversified nature of the load it is possible to 

operate the system with a better load factor 

3 Purchasing supplies and spare parts at a central point has 

a decided economic advantage 



S3 

4 The centralization of management and operating force re- 

duces the expenses 

5 It is possible to serve certain classes of customers whom the 

small individual plant could not afford to serve 

6 The lower cost of production due to centralized service, 

makes it possible to offer lower rates 

7 Consolidation of interests makes possible the financing of 

improvements, substitution of new for obsolete apparatus 
and the extension of service into new territory, and 

8 Better regulation and better protection can be provided." 

All the above advantages are seen from the viewpoint of an investor 
— even the lowering of rates as a result of lower cost of generation 
in a centralized plant is mentioned merely as a "possibility." A 
decidedly broader and deeper insight into the question is manifest 
from the stand taken by the British Committee. For them, the 
economic advantages do not mean higher dividend on the company's 
stock but conservation of natural resources, human energies, and 
development of industries in the country as well. The recommenda- 
tions therefore embrace the following aims : 

"Centers, or sites, suitable for electric generating purposes should 
at once be chosen on important waterways as the future main centers 
of supply for each of the districts into which the country is to be 
divided. (48-2) The sites so chosen should be as large as possible, 
having in view the land available in suitable localities, and should have 
ample water and transport facilities. Land is required not only for the 
power stations themselves — which for the sake of security and safety 
would have to be suitably subdivided, that is, they would not be 
contained all in one building — but for the processes involved in the 
extraction of by-products from the coal before it is used for the 
production of power, where such extraction is found to be justified. 
It is also required for the development of electrochemical processes, 
which may be most conveniently carried on in close proximity to 
the power plant. This condition entails the sites being chosen out- 
side, not inside, the towns. The health of the great industrial centers 
and the congestion of the railway lines in their neighborhood would 
be radically improved by arranging that the conversion of coal into 
motive power was carried out away from densely populated centers. 

"Plans should be prepared for the construction immediately 
after the war on these sites of the first installment of large super- 
power plants capable, first, of supplying through a comprehensive 



54 

electric power distribution system which must also be arranged for 
the existing demands of the community ; and, secondly, of supplying 
electrical energy at the lowest possible price for new processes and 
manufactures" (48-4). 

If power is to be supplied throughout the country at the lowest 
possible price, the following conditions must be secured : 

1 The power users in each industrial district must be supplied 

from one common inter-connected electrical power distri- 
bution system 

2 Large generating machines, not less than 20,000 horsepower, 

must be used and they must be erected in the best possible 
position for economical production. In the more important 
industrial districts generating machines of 50,000 horse- 
power might be advantageously used 

•3 Power available from surplus gas or waste heat should be 
turned into electrical energy on the spot in local plants 
which would feed into the main distribution system. As 
regards waste coal — coal which it does not at present pay 
to bring to the surface — this could, where transport was the 
ruling consideration, also be used on the spot. 18 

In all these considerations it is important to note that the emphasis 
is put on the aim of supplying the energy at the lowest possible price 
— not merely production at the lowest possible cost, for the advan- 
tages of centralization from the viewpoint of the national economics 
as emphasized in British Report, is not a boon, but a danger if it 
gives a special privilege to one group of investors. Such privilege, 
when practiced, accumulates wealth in the hands of one group at 
the expense of not only the development of production and of the 
country's industrial progress but it also reduces the purchasing 
capacity of the Nation since the wages remain low whenever motive 
power is not extensively applied on account of its high price. 

On the contrary, when the lowest possible cost of production is 
not an aim in itself, but is regarded as a means for the reduction of 
price, the accruing benefits are large not only to the community, 
but to the producers of power as well. The perfection of plant and 
methods, permitting the service at a low rate by stimulating the 
power uses in the established field and by opening new fields of 
application, does increase the bulk of the net revenue even if it is 
at a lower rate of profit. Furthermore only very large central sta- 
tions or even systems of interconnected large plants can secure the 
maximum advantage of best diversity of demands. From this angle 



55 

the limit is not how big the system may be but how small it dare 
to be before unnecessary duplication of installation, efforts and 
wastes will cause harm to the country. Residential, commercial, 
industrial, and municipal service must be combined as much as possi- 
ble with traction and railway load and electrochemical processes, 
charging secondary or storage batteries, etc. Such widest combina- 
tion of loads feasible only with a large installation necessarily pro- 
duces not only the best fuel economy because of the use of large, 
thermally efficient units but more specifically because it eliminates 
idleness, losses for banking boilers, and losses due to fluctuating 
load when the units are not operated continually at the lowest point 
of their water rate curve or during hjgh peaks for which a considera- 
ble generating capacity must be &ept idle most of the time. How 
serious this last item alone is to-day may be seen from a statement 
of an official of the Interborough Rapid Transit Company who in a 
discussion of a paper on Modern Central Station Design said : "50 
per cent of the machinery in a lighting plant operates only 300 hours 
per annum, so that it becomes most important to keep down the first 
cost, for assuming that a plant cost $125 per kilowatt capacity then 
the interest and depreciation charges upon the portion of it used 
for the peak load would amount to 5.2 cents per kilowatt hour, or 
probably five times as much as the operating cost." 43 While it is 
true that a great many individuals in an organized society are having 
definite hours to work together, to travel together, to rest together, 
to go to theaters, etc., no individual can do several things at the 
same time and the required maximum demand on electric power for 
each can not coincide. Therefore, the economy of a combination of 
all requirements in a community for power, light, traction, heating, 
etc., is fundamental and large-scale centralization and interconnec- 
tion of plants offers the best service with minimum expenditure of 
efforts, fuel and time. 

Among the additional advantages to be secured from the erection 
of plants on roomy and efficient sites, apart from those resulting 
from the increase in the size of the plant the foremost place belongs 
to the opportunity that a central plant offers for better supervision, 
as well as development and application of the best operating and 
managerial methods; next comes the opportunity of offering to 
the employees more comfortable, congenial, hygienic and safe sur- 
roundings and all around better conditions for work; lastly a cen- 
tralized plant, if properly managed is capable of producing higher 
efficiency and better fuel economy, not to mention the advantages 
reflecting on the manufacturers and dealers in power plant supplies 



56 

and accessories, whose selling expenses may be reduced to a mini- 
mum, being unnecessary wherever the purchasing organization of 
central plants looks itself for sources of supply instead of an army of 
salesmen searching for new and unknown small buyers of a ques- 
tionable credit standing. 

Isolated Plants 

Apart from what has been said regarding advantages of central 
plants favorably located as regards to fuel, water, distribution, etc., 
stands the question of block-stations, mill or factory power plants, 
hotel and institutional plants and the like. While it is almost beyond 
the need of proof that small electrical plants, imperfectly equipped, 
poorly located, handicapped by the character of load and unfavorable 
diversity factor and frequently managed in an antiquated manner, 
should pass and actually do disappear, this can not be affirmed of 
all without displaying one's ignorance regarding a large number of 
so-called isolated plants. Their existence is justified in very many 
cases where steam as such is a principal item of output. Notwith- 
standing the fact that electrical energy may be conveniently trans- 
formed to meet any industrial demand such as for pneumatic power, 
hydraulic power, refrigeration, and even heating it is hardly justified 
in many instances to heat hotels or apartment houses electrically or 
boil the cloth in a bleachery by purchased current. Again, an end- 
less number of cases may be cited where replacement of existing 
equipment in order to adopt the use of electricity would increase 
financial burden beyond the gains of such a change. Similarly, it 
is entirely feasible to propel ferry boats and ships by electricity 
generated in central stations on shore instead of in isolated boat- 
plants, yet the development in this direction has been so far extremely 
slow. 

We shall return to the relations of central stations and the isolated 
plants in the Chapters X and XI on Analysis of Expenses, and 
Energy as a Commodity, while here, considering the influence of 
isolated location of a plant on its operatnig economy only a few 
characteristic requirements need to be mentioned. 

1 Factory power plant should preferably be located on the 

spot nearest to the steam consuming department as losses 
in piping are the greatest of all other transmission losses 

2 It should be directly accessible from outside both for delivery 

of fuel and removal of refuse 



57 

3 It must occupy the part of ground not needed for the ex- 

tension of manufacturing departments 

4 Provisions should be made for ample fuel storage close to 

the boiler house 

5 To provide for possible future enlargement of the plant 

careful location of buildings on the site chosen is essential 

6 Boiler houses must be located, whenever possible, jointly 

with engine rooms, as the function of these should be 
compared with pressure reducing valves. (Nearly 90 per 
cent of heat remains in steam after it performs the work 
in an engine in an average case.) 

Unfortunately, the effect of a poorly located factory-plant is seldom 
recognized by the builders who are naturally planning to accommo- 
date the manufacturing processes before any of the auxiliary depart- 
ments; likewise the architects laying out apartment houses, hotels, 
institutions, etc., seek first to utilize the space in a manner bringing 
most rent, and the common result is that the plants are put in places 
unsuitable for anything else, offering consequently numerous dis- 
advantages for convenient arrangement of equipment, increasing 
cost of handling fuel and materials, making work for the employee 
unpleasant and unnecessarily hard. All these taken together tend 
to increase the operating cost while in many instances, if these un- 
avoidable expenses caused by poor location of a plant are compared 
with the gains in the renting of manufacturing space made available 
by cramping the plant in the wrong place, the case proves to be 
penny-wise and pound foolish. 

Examples of Plant Sites 

The study of two fairly good examples of solution of 
local problems by electric companies in the past may further eluci- 
date some of the points brought in the foregoing review. The 
Philadelphia District ** offers a few interesting instances inasmuch 
as the growth of requirements overtook the growth of the electric 
companies. Local companies having practically monopolized the 
catering of electricity in the district, cooperate to a large extent with 
each other in handling various loads; comprise industrial, commer- 
cial, municipal and transportation service, cooperate with small 
hydroelectric development in the neighborhood and met with an 
obstacle to extending the area of service notably through legal and 
political limitations, 



58 

The existing sources of electric power available for public use 
within that district were: 

Kilowatts 
Summer, 1918 Approximate 

Capacities in 

Philadelphia Electric Company (total available) 184,155 

Delaware County Electric Company (total avail- 
able 178,638 

Philadelphia Rapid Transit Company 76,000 

Philadelphia Railways Company 625 

Philadelphia & Western Railways Company 4,000 

Frankford, Tacony & Holmesburg Street Railway 

Company 800 

Fairmount Park Transportation Company. 1,800 

Trenton, Philadelphia & Bristol Street Railway 

Company 800 

Eastern Pennsylvania Gas & Electric Company 200 

Philadelphia Hydroelectric Company 1,400 



Total installed generating capacity in all com- 
panies 269,780 

Total actually available power 261,200 

This capacity is divided among over twenty power plants scattered 
in an area bounded by the Pennsylvania-Delaware state line, the 
Delaware River, and the southern end of New Jersey, as shown by 
Figure 10. This area in its three main districts has diversified re- 
quirements depending on the nature of the industrial or residential 
development thus : 

Northern Central Southern 

Industrial 65 per cent 37 per cent 92 per cent 

Lighting 33 per cent 61 per cent 6 per cent 

Municipal 2 per cent 2 per cent 2 per cent 

Dissimilarities in transportation demands in the same districts is also 
very pronounced: 

Northern Central Southern Total 

Rapid Transit 15% 75% 10% 60% 

Pennsylvania Rail- 
road 100% 40% 

10% 84% 6% 100% 

The combined transportation requirements are supplied jointly by 
Philadelphia Electric Company (46.5 per cent), Philadelphia Rapid 



59 




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Transit Company (52.3 per cent) and the Hydroelectric Company 
(1.2 per cent). 

The growth of the demand similarly is unequal in different dstiricts : 
Northern 35.8 per cent 

Central 28.4 per cent 

Southern 35.8 per cent 

While this estimate has been made during the war in anticipation of 
certain special requirements, it may serve for elucidation of 



6o 

the reasons for the selection of certain localities for the additional 
generating plants. The greatest shortage was thus anticipated in the 
Northern District. With the construction of a new plant in the 
Southern District in progress, it will be necessary to transfer the 
surplus of generating capacity from the Southern District to the 
Central District through the 66,000 volt line and from thence together 
with the surplus capacity in the Central District, transfer it to the 
Northern District, through its substations for distribution. The 
electric company therefore plans the construction of a plant in the 
Northern District on the bank of the Delaware River, selecting for 
it a site where coal will be available both by rail and water ^ ash 
removal not difficult, water in abundance, neighborhood of pre- 
dominating industrial character, etc. 

Another interesting plan has recently received the Parliamentary 
sanction giving the Manchester Corporation the right to proceed with 
an electrical scheme, which has become necessary owing to the rapid 
increase in the demand for electricity in the Manchester (England) 
area. 45 Figure 11 gives a general idea of the relative location of 
the proposed plant to the existing net of substations through which 
the territory is served. The project was described thus: "At the 
present time the city is supplied from three generating stations — 
Dickinson and Bloom Street stations, which supply direct current 
in the centre of the city with a combined plant capacity of 14,000 
kilowatts, and Stuart Street station, in the Clayton district, which 
supplies alternating current at 6,600 volts pressure to numerous sub- 
stations, and has a plant capacity of 55,500 kilowatts. 

"In connection with the Stuart Street station there are 22 sub- 
stations — excluding those on consumers' premises — with an installed 
capacity of 33,000 kilowatts. One of these is at Dickinson Street, 
where the generating plant was unequal to meeting the demand for 
electricity in the adjoining area. 

"To meet the requirements of the large power users, the Cor- 
poration has also equipped 58 substations on consumers' premises 
with an installed capacity of 34,500 kilowatts. 

"The area over which supply powers are held now amounts to 
46 square miles, with an estimated population of 750,000, exclusive 
of the Middleton area, to which a bulk supply is given. 

"The electrical demands of the area can be gathered from the 
fact that nearly 155 million units were generated and 118 million 
units sold during the year ending March 31, 1914 and that the 
maximum demand of about 50,000 kilowatts is increasing at the 
rate of some 5,000 kilowatts a year under normal conditions. All 



6i 

the existing stations are limited in capacity by reason of water facili- 
ties for condensing purposes, and the existing buildings at Stuart 
Street will be full up with an installed capacity of 60,000 kilowatts 
the adjoining spare land being required for coal-storage purposes. 



Barton Power Scheme 1 Middleton 


' j 


Location of Plant and Territory /^^.cL^^s. 


/ 


of \ \~ 




Manchester Corporation \^p 




Cheetham j/fll Harphurhetj 




. \qP ^Queens Rd.^J/ 


> Newton HeatJi 


j - \ Sherburme c/ Ui i J 

( ^y \° £: r^\ 

\ CsT ^OWham ^ .StuatfWioV? 


BARTON ^< 

X\ Tra 

f DavyHulme 


*»^^ Dickinson *j: 

fforcK / •• 5 
rk 5>v ^T Bloom Station i* Q 

\ S~*~^' VMossSide, 


°0pen5jiaw \* 
^ (X /'oDenton J 


/— r " o Rusholme 
( WestRanae 

/OXhorlton A Fallowfield 
jr ^v ^ o J 


oLevensHuImej ) 


/ V. Withmqton XHeato\ 


X Sale y^v /\ x Norns/ 


/, i^ / Didsbury 1 


_J KEY 


^Timperley \ >^ 


• Existing Generating Plants 




■ Proposed Generating Plant 




# Corporation Sewage Works 




o Existing Substations ' 


• 


▲ Proposed Distributing Stations 



Fig. ii. — Barton Power Scheme 

An interesting example of a pioneer English project of comprehensive develop- 
ments of electrical zone. 



"In view of the limitations mentioned, particularly as regards 
the Stuart Street station, the effective capactiy of which for generat- 
ing purposes will be reached when the maximum demand attains to 
45,000 kilowatts, allowing for reserve plant, it was decided that 
further generating plant in a fourth station should be available by 
the summer of 1917. 



62 

"With this object in view numerous sites were inspected by the 
representatives of the Corporation, who were faced with a problem 
considerably in advance of anything yet attempted in the way of 
municipal electricity supply, as the project ultimate capacity of the 
new station will be some 160,000 kilowatts. 

"The site actually selected for what is now known as the Barton 
generating station covers 12 acres, and is situated at the extreme 
western end of TrafTord Park, on the side of the Bridgewater Canal, 
and in the parish of Davyhulme. This site fulfills the necessary 
conditions as to fuel, water, length of transmission lines, and founda- 
tions, as by means of the Bridgewater Canal the West Lancashire 
coalfields are easily accessible, being only four miles away, while 
the TrafTord Park railways provide through communication with 
the English coalfields generally. In the matter of water for con- 
densing purposes, the site is also convenient to the Manchester Ship 
Canal. As, however, the consent of the Canal Company to the use 
of the water is at present withheld, it is proposed to use the sewage 
and subsoil water — in the form of a purified effluent — which passes 
down the main outfall sewers to the Corporation's sewage works 
at Davyhulme, situated at some 1,400 yards from the Barton site. 
The Barton site is about five miles from the centre of the city, being 
actually nearer than an alternative site within the city area, which 
met with some favour; trial borings have also shown as regards 
foundations that red sandstone rock underlies the whole of the site 
at a depth ranging from 7 to 8 feet, and further, there are good 
grounds for considering that at least one and one-half million gallons 
of good quality water can be pumped from boreholes in this rock 
every 24 hours. 

"It will be necessary to construct a new bridge across the Bridge- 
water Canal to carry coal and railway traffic to the station. 

"The preliminary plans of the generating station which we are 
able to reproduce show that not only will it be the largest power 
station in the kingdom so far actually projected, but that it will be 
essentially a big unit station. 

"Except as regards its adjacent situation, the Barton station will, 
under present arrangements, have no connection with the growing 
manufacturing area of TrafTord Park, where at the present time, 
many concerns possess their own power plants, and the local power 
supply in the Park averages under 3,000 kilowatts, representing some 
seven million units a year. 

"We believe it is no secret, however, that the existence of the 
huge plant at Barton, in close proximity to the Ship Canal and 



63 

this favoured manufacturing area, is expected to label to far-reaching 
developments in the future." 45 

The similarities and differences of these two cases may easily 
be gathered from this brief review and the interplay of causes in 
meeting the fundamental requirements as to location of a plant is 
in every individual case so complex and its effects on the success 
of the undertaking and on the managerial problems so profound 
and lasting that the greatest caution should be exercised both in 
selecting the site and in studying its influence on the operating 
practice. 



Chapter III 

THE EQUIPMENT OF PLANTS 

THE physical characteristic of a power plant is determined 
by three main factors : 

1 Location of the plant and its fitness for the service 

2 Arrangement of units in relation to one another in space 

3 Inherent efficiency of equipment. 

A power plant may be defined as a mechanical installation, 
which is capable, under human will, of transforming a certain 
form of incarnate energy (either potential or dynamic) into 
some other desired form of energy, within predetermined time 
and space. From this broad definition it is quite evident that 
an almost endless variety of power plants may be further char- 
acterized according to the nature of transformation (electric 
substations are excluded as they handle the same form of energy 
and merely changing its characteristics), as to the quantity of energy 
handled per unit of time, as to percentage of losses sustained during 
the process, as to the costliness of performance, etc. In this manner 
a plant might be described as "a carboelectric generating plant of 
50,000 kva capacity, 12 per cent thermal efficiency, generating 2,300 
volt, 60 cycle, 3-phase current for 0.3 cent per kilowatt hour gross 
operating expense, and 0.75 cent total cost while running at 70 per 
cent load and machine factors, etc." 

Power Plant Lay-Out 

While generally speaking the machinery can be moved, in a power 
plant the re-location of unfortunately placed equipment is practically 
prohibitive due to excessive cost of rearrangement of special founda- 
tions, flumes, piping and other permanent parts of buildings. In 
this sense the lay-out of the plant equipment is a highly important 
factor which permanently affects the economy of operation. The 
elements of this order may be grouped as follows : 

A Unloading and storage of fuel 
B Handling of fuel and refuse 
C Visibility of equipment 

64 



65 

D Accessibility of all parts 

E Space for repair work 

F Grouping of units 

G Centralization of operation 

H Compactness 

I Safety 

K Comfort and hygiene. 

We will briefly review some of the salient points of each. 

A. The cost of unloading and handling coal varies widely, depend- 
ing on the facilities available ; whereas in one plant coal is unloaded 
from the barge directly into an overhead bin in the boiler room, in 
another plant coal may be shoveled out from the cars, carted to a 
pile, then carted when needed to a shed near the boiler room and 
wheeled in as used. There is equally great dissimiliarity in the means 
and capacity for storing coal. While not generally recognized, the 
coal stored in excess of safe precaution against transportation dis- 
orders, represents in itself an idle investment and in figuring out the 
overhead on coal unloading and handling equipment, rent on yard, 
etc., interest on coal pile should be taken into account. Effect of 
storage of coal on its efficiency will be treated elsewhere. 

B. Handling of fuel and furnace refuse influences the cost of 
operation in a still greater measure. Equipment for weighing and 
feeding coal to the furnace, as well as for disposing of soot, ash and 
clinkers is in some instances so costly as not to offer any advantage 
over manual handling, in other cases no expenses should be spared in 
order to avoid danger of interruption of service or damage to furnaces 
by installing additional facilities of this kind. In practice one meets 
extreme range from ash hoppers so small as to necessitate the 
continuous work of a gang of ash wheelers, to elaborate mechanical 
conveyors, standing idle 94 per cent of the time. Which may be 
the correct way under the circumstances, depends entirely on the 
local conditions but it is beyond reasonable doubt that in each indi- 
vidual case this part of the plant equipment exercises a definite in- 
fluence on the operating cost. 

C. The visibility of equipment does not mean merely good illu- 
mination. With a limited number of attendants, which is common in 
modern plants, the arrangement of units and especially auxiliaries 
is often such that the plain view is obstructed by other machinery, 
pillars, walls, etc., thereby either jeopardizing the safety of opera- 
tion or necessitating extra employees. 



66 

D. The arrangement of equipment is frequently made without 
due regard to its accessibility. What it means to get to a suddenly 
stopped vacuum pump in a hurry when it is located in a cellar with 
dark slippery stairs leading down from the opposite end of the 
engine room, jumping over a few pipe lines, crawling under electric 
conduits, squeezing between a tank and the wall before one can 
reach it, is known from experience to many operating engineers. To 
do repair work on the unit with parts inaccessible, with no room 
to use a wrench, etc., is another feat. Many accidents easily pre- 
ventable with accessible machinery occur due to poor layout; still 
greater losses in operating economy are often due to the same 
reason: delay of repairs, postponement of unpleasant work and 
disregard of coming trouble. 

E. Closely connected with these handicaps of poor layout is that 
of lack of working space around the machinery undergoing repair 
or overhauling. Lack of head room to take out tubes from vertical 
boilers, lack of space to remove pump runner or piston rod or 
replace economizer or condenser tubes are not infrequent in the 
plants built by inexperienced architects or jobbing contractors. What 
such handicaps mean in the increased cost of maintenance is almost 
insignificant compared with the losses of time in production, and 
moreover with operating losses accumulating while the repair on a 
defective piece of apparatus is constantly postponed because of the 
difficulties anticipated. 

F. Grouping of units is another fundamental requirement for the 
successful operation of the plant but which seldom receives due 
consideration from the builders. Proper layout of piping, valves, 
and meters are essential not merely for timing the schedule of 
repairs on the boilers and turbines so as not to interfere with the 
regular operation or accuracy of records but it is often a matter of 
safety. Inability to separate productive groups and units is in- 
numerous cases responsible for poor operating economy and quick 
deterioration of the equipment. 

G. The principle which we call centralization of operation is com- 
paratively new. Its early demonstration may be found in switch 
boards with remote controls of turbines, etc. In small plants this is 
carried sometimes to an absurdity by placing pannels on a balcony 
thus doubling the crew without gaining any advantage. In boiler 
houses however the principle of centralized control of operation is 
almost entirely unknown, yet the apparent advantages of having the 
control and regulation of combustion and steam generation centralized 




Fig. 12. — Centralized Instrument Board 

In boiler room practice the principle of centralized control board is of recent 
origin. This board consists of four panels centralizing battery of four large boilers. 
Indicating flow-meters, draft gages and flue gas pyrometers show conditions in 
each boiler unit; temperature of feed water and of superheat and steam pressure 
are recorded for the battery as well as chart-drawing; integrating flow meter 
records total output. Gas analyzer is in the rear and telephone to the left keeps 
boiler room foreman in touch with the rest of the plant. 




Fig. 13. — Non-Slippery Walks and Railings 

It is important to provide safe and convenient gangways around the boilers 
valves, machinery, etc. There must be always plenty of work space around, good 
ventilation, and it should not obstruct light. 



6 7 

on one central board, as shown in Figure 12, operated by trained 
firemen or a combustion engineer are amply demonstrated in the 
author's practice. 

H. Compactness of plant layout without crowding with resultant 
inaccessibility of equipment for operation, inspection and repair is a 
hard problem to solve. The evident advantage of its successful solu- 
tion lies of course in reduced rent, smaller distances to walk through 
for operators, and further advantages for extensions. Otherwise, 
however, this factor has little bearing on operating economy and 
methods save for the reduced expense of cleaning, lighting, heating, 
and the like. 

I. The importance of safety arrangements and devices is so well 
recognized that it is hardly worth-wrhile to enlarge upon the subject. 
In large plants, and superpower stations, explosion proof walls and 
gaps and separate "unit" installation are fully recognized. Non-slip 
steps, as shown in Figure 13, special precautions and arrangements in 
high tension room and transformer cells, protection against bursting 
tubes or excessive wind pressure in furnaces liable to burn firemen, 
etc., are all well known and have no little bearing on the amount of 
liability insurance. First-aid facilities for the use in treating the 
minor injuries that are liable to result in blood poisoning, blisters, 
etc., are of course a purely administrative function and will be 
treated elsewhere. Figure 14 reproduces an actual case of protection 
rendered by goggles. 

K. Layout of the plant with due regard to hygiene and the com- 
fort of the employee is the paramount requirement not only from a 
humanitarian but from an economic standpoint as well. Men actually 
live in their places of work, and too much attention cannot be paid 
to hygienic requirements. Petty annoyances caused by lack of 
comfort distract attention from the proper performance of work by 
occupying men's minds with schemes of avoiding inconvenience. Such 
elementary requirements as good, cool drinking water, comfortable 
baths, lavatories, dressing rooms, plentiful illumination free from 
glare and flickering, absence of cold drafts, good ventilation, dust 
prevention, restful seats, etc., are even more important than refine- 
ments in design and thermal efficiency of equipment. Tired, annoyed 
men with distracted attention, will overlook or even cause greater 
losses than the difference between the best and the next best 
efficiency of equipment. Firemen invariably increase their efficiency 
from four to five per cent under improved hygienic conditions. 
Figures 15 and 16 illustrate the kind of resting facilities com- 



68 

monly found in the average boiler plant. Anything that can be re- 
covered from a junk heap to serve as a seat, so important for men 
after strenuous work at slicing, breaking clinkers or cleaning fires, 
is used and it does not answer the most modest requirements of 
hygiene, comfort, and decency. Figure 17 represents an attempt 
by the plant management to provide firemen with permanent and 
more or less restful seats and while these are not to be compared 
with office furniture, the expression on the faces of the occupants 
suggest a measure of contentedness. 

Common Faults of Arrangement 

The consideration of the influence of equipment on the cost of 
power would be far from complete without reference to that much 
neglected question of arrangement of equipment in a power plant 
and the location of the plant itself. The location of power plant 
in or among the factory buildings has a great deal to do with 
economy of operation and in addition, quite materially affects the 
cost of power at its ultimate place of consumption. As is often the 
case in an old and growing concern as demand for power, light, 
heat and ventilation grew with the development of the business, 
the necessary additions are made not in accordance with a well 
defined plan but when and as expediency demanded. Boilers and 
engines are stuck here and there; piping rivals in complexity the 
ancient Labyrinth ; work is frequently done without any drawings ; 
equipment is selected not for its fitness but for its availability at the 
time and is sometimes located even before the housing is erected; 
and the consequences are sometimes so serious that scrapping of 
the entire old equipment and the erection of a new plant is more 
economical than the continuation of waste of energy and material 
in the old plant. 

Scattering the equipment in an uncentralized plant requires more 
operating labor, makes repairs difficult, handling of coal, ashes and 
materials expensive, supervision inconvenient, accidents more likely, 
rent higher, frequent interference with manufacturing, etc. 

Piping in such a case is unnecessarily long with corresponding 
losses, the frequently confusing tangle of branches, etc., is unfamiliar 
to employee with the result of leaking valves, inoperative traps, ex- 
cessive number of bends, reducers, etc. 

Absence of isometric or perspective diagrams causes much con- 
fusion in inspection, neglect in operation, danger and delays in 
emergency, etc. 




Fig. 14. — Goggles that Protect 

The use of these goggles in one of the plants under our supervision actually 
saved eyesight of a mechanic. General superintendent issued following statement 
after the accident: 

Notice 

On Monday, October 21, 19 18, Nathan Rice was pouring babbit in a bear- 
ing in the Machine Shop after heating the bearing with a blow torch and taking 
all possible precautions. 

The babbitt blew out of the bearing for some unexplained cause and covered 
his face and goggles as you can see in the attached photograph. 

Without goggles he would probably have lost the sight of both eyes. 

Remember this lesson and don't make it necessary for your foreman to tell 
you to wear goggles when pouring molten metal, chipping or grinding. It is 
even more important to you that your eyesight be unimpaired, than to your em- 
ployer. 

DON'T FORGET THOSE GOGGLES 



6 9 

Poorly proportioned capacity, or equipment ill adapted to 
the service required, or character of power unsuited to the work, 
not only unnecessarily increases the cost of generation of power, 
but is frequently a cause of spoilage of goods manufactured. It 
sometimes impedes the manufacturing processes as, for instance, 
in the case of uneven speed in a belt-driven apparatus requiring 
uniform speed, or of the use of a motor the speed of which is 
affected by voltage and load, or the use of pneumatic rather than 
electric or steam power, fluctuations in steam pressure and temper- 
ature, the use of live steam where exhaust would do, etc. 

Finally, not infrequent instances are found where repairs or 
replacements cannot be made on account of the lack of room around 
the machinery, building being completed or even built after the 
machines already have been installed. 

In the endless variety of such cases, the relocation or remodeling 
of generating equipment, means for transmission of power, etc., is 
frequently inadvisable for some reason or other, such as lack of 
space, lack of capital, loss of production during reconstruction and 
the like, but whenever such a remodeling is possible and advisable 
from the economic standpoint no architect or contractor should be 
called in on the job until after manufacturing men have presented 
their requirements to a power specialist and he has worked out the 
specifications and plans from which both operating results and neces- 
sary layout of equipment can be definitely predetermined. Again, 
in certain localities and in manufactures not requiring steam for 
processes, additional studies should be undertaken to ascertain 
whether purchase of power on a long term contract would not be 
the best solution of the problem. This question will be analyzed in 
detail later on ; in passing be it noted that the "free reports" offered 
by new business departments of some public utility companies have 
often a strong smack of "cure-all" patent medicines recommended 
by some unscrupulous druggists. 

It is not the author's purpose to deal with any specific and con- 
crete description of plant equipment, machinery, instruments, etc., as 
these matters are fully covered in various catalogues, bulletins, and 
manufactuers' literature; he is merely concerned with such char- 
acteristics of the physical properties of the plant equipment and 
its layout as affect functional conditions and permanently influence 
the methods and results of the operation. It is timely and proper, 
to recall however, at this point, the effect of sanitary and hygienic 
surroundings of work, arrangement of machinery and safety appli- 
ances, on the greatest and least excusable waste of all-waste of 



7o 

human happiness, health, and life. While statistics of industrial 
accidents, such as boiler explosions, electrocutions, mangling of 
limbs, burns and scalds, falls, etc., is fairly complete and more or 
less known, impressive in its figure which exceeds half a million per 
year, we as yet know little of industrial diseases and, their prevention 
should be a field for a broad cooperation between engineers and 
doctors. An appallingly large number of rejections of drafted men 
because of their unfitness for military service is the strongest possi- 
ble condemnation of an economic system that ruins the future of the 
country and undermines health and prosperity by neglecting the 
public health. Referring to similar conditions in England, Lloyd 
George expressed the fear that a nation whose working class must 
live in conditions creating weakness and diseases cannot hope for 
any measure of success. In the United States where the number 
and percentage of accidents on railroads and in mines and in industry 
is perhaps the greatest in the world, the warning should assume the 
proportion of an alarm, particularly since the European immigra- 
tion does no longer refill the ranks of killed and maimed. 

Characteristic of Equipment 

As we approach the third group of permanent physical charac- 
teristics of the power plant — that of efficiency of equipment, thermo- 
dynamic or other, we feel justified in again emphasizing the fact, 
that under the existing peculiar financial conditions, the mere thermo- 
dynamic perfection of equipment many and often times does spell 
a lowering of commercial pro fit- rate. 

Let us assume two installations one A consisting of two 2,500 
kilowatts turbo-generator units bearing $9,000 cumulative annual 
fixed charges, and an installation B of one 5,000 kilowatt unit with 
fixed charges amounting to $7,500 per annum. Since the smaller 
units at full load would consume 15 pounds of steam per kilowatt 
hour whereas the larger one only 13 pounds per kilowatt hour 
with the cost of coal at 22^ per 1,000 pounds of steam the annual 
output of 10,000,000 kilowatt hours, the fuel saving would be 
theoretically $33,000— 28,400=$4,400 per year in favor of the larger 
and more efficient unit, and adding economy in fixed charges 
($1,500) the gross saving would appear as high as $5,900 per year. 
The fallacy of such a calculation is, however, easily exposed if we 
consider that for our annual output the larger turbine will show the 
advantages of full-load efficiency only temporarily during peak loads, 
the average steam consumption per kilowatt hour being in accordance 




Fig. 15. — Sloppy Boiler Room 

Work of the men is greatly handicapped by untidy upkeep of the work place. 
Coils of hose, puddles of water, firing and cleaning tools scattered over the floor 
and dilapidated seats without backs add to discomfort and fatigue and create the 
atmosphere "I don't give a darn." 



7 1 

with its water rate curve close to 20 pounds per kilowatt hour, 
whereas in case A most of the time only one turbine will be running 
at nearly full load (15 pounds per kilowatt hour) with the average 
steam consumption of about 17 pounds per kilowatt hour. Now, 
the true cost of coal per year for the same output and the same 
typical load-curve appears in case A as $37,400 and in case B 
as $48,400 or $11,000 in favor of the more expensive and thermally 
less efficient installation. Subtracting from this gross saving the 
excess of fixed charges ($1500) we still have a net gain of $9500 
per year, instead of $5900 loss. 

In short, conditions such as nature of service, average load, per- 
centage of idle time, probable future load and output, etc., swing 
the balance of such and similar comparisons in such a marked degree 
that one cannot be too careful in estimating the influence of thermo- 
dynamic perfection, and the first cost of equipment, upon its ultimate 
effect on cost of operation. Similarly the much discussed influence 
of auxiliaries on the ultimate economy in a steam power plant should 
be first carefully studied from the heat balance viewpoint, since 
under certain conditions the benefit of high temperature boiler feed, 
effect of economizers, high vacua, etc., may in the last count offset 
the apparent advantages of high-economy apparatus if judged in 
themselves. 

The relation between the thermal efficiency of a plant's equipment 
and operating economy is thus a question which under existing 
economic conditions does not permit a rigid definition or any specific 
rule. The operating economy due to the higher thermal efficiency 
of a unit may be entirely offset by increased capital charges incident 
to this improved machinery; again cases are on record where the 
employment of large size unit of high thermal efficiency is decidedly 
disadvantageous when its use is limited to only a few hours a day, 
or when the unit is operated most of the time at the load resulting 
in poor economy. This is particularly true in plants handling an 
uneven load and a most painstaking selection of sizes and character 
of generating units is of great importance, while in plants carrying 
regular, well diversified load, the problem appears fairly simple. 
Figure 18 represents two very dissimilar load curves carried by two 
well-known public utilities and even the most superficial observation 
suggests the necessity of employing radically different equipment 
for carrying economically either one or the other load. When we 
come to consider the electric railway plant or factory power plants, 
the dissimilarity of requirements have a still more pronounced effect 
on the selection of equipment both from the viewpoint of economy 



72 

and service. It is obvious that the selection of equipment must 
begin from consideration of prevalent load curve modified by sea- 
sonable variations and probable future development. Figure 19 
illustrates a well-known example of a plant handling an average 
load of 40,700 kilowatts with 72,000 kilowatts maximum hour, 4 * 
comparing its electric output curve with the heat input. Mr. R. J. S. 
Pigott in a paper before The American Society of Mechanical En- 
gineers presented a simple and in many cases serviceable method 
of graphic presentation of performance of plant equipment, either 
separately for every unit and its auxiliaries or for the entire plant.* 7 
There can be no doubt but that this and similar methods of graphic 
analysis in steam power plants, are not only essential for an intelli- 
gent design, but are particularly valuable from an operating view- 
point. 

Capabilities of equipment carefully studied and clearly represented 
in the form of plain curves are very helpful in : 

a Selecting suitable equipment for service from the veiwpoint 
of the adoption of the most economical, thermally efficient 
and reliable equipment. 

b Devising operating practice, i. e., mode of use and number 
of units needed for every variation of demand 

c Controlling the performance, enabling an accurate compari- 
son of what was done with what could be done 

d Comparing operating results of physically dissimilar plants 
in order to learn how close the actual performance corre- 
sponds to the predetermined individual plant standard. 

Figure 20 refers to the case represented in Figure 19 and from 
a study of existing characteristics of equipment, the author was 
able to conclude for instance, that by means of heat balancing the 
total required input of 19,823,300,000 B. t. u. may be reduced to 
19,630,800,000 B. t. u. per day, or roughly to accomplish an annual 
coal saving of 2750 tons. 

Much more elegant and broadly applicable method was afforded 
by R. H. Smith, based on a theoretically complete and satisfactory 
formula with nine constants, which makes the two rates of cost 
vary with size and with pressure, namely: 

v ^.K4+K 5 P! , K 8 



(K 6 +S 2 ) 2 ' k 9 -Pi 
K 7 +K 8 S 2 , K 5 



Kp Kz ' (K 9 -Pi) 2 ' K 6 S 2 




Fig. i 6. — Everything for Discomfort 

Bad arrangement for wheeling coal in over the loose planks, uneven rails, etc. ; 
no provision for direct weighing of coal; scales out of the way; makeshifts for 
seats and no lockers for clothing. Ladder unprotected. 



73 

The second differential coefficient, showing the curvature of the 
surface diagram is: 

K S2 P^K Pi S 2 = 



(*T 4 +S 2 ) 2 ' (i^9-Pl) 2 

Establishing thus the connection between work, heat, and cost, 
or more specifically relations of pressures (initial) and volumes 
(final) on costs, the formula is applicable to the calculation of most 
commercially economic combinations of the elements of design. The 
diagram, reproduced in Figure 21, constructed on this principle 
may be applied either to engines, boilers, condensers, gas producers, 
etc., separately or to complete plants of combinations of these. 

In Smith's diagram, the pressure scale runs to 200 pounds per 
square inch and the volume scale to/ 100,000 cubic inches. The full 
and dotted lines are parts of the permanent diagram. The four 
long dash lines are the only construction lines needed to obtain the 
results for any desired particular pair of size and pressure values 
Pi and 5*2. Two of these lines are simply the lines of the cross- 
section paper and do not need to be drawn. The other need to be 
constructed though not by actual drawing, but simply by laying the 
edge of the set square in the correct direction through the origin O. 

While those interested in this unique method should be referred 
to the source 49 it should be understood, however, that this formula 
and diagram may be applied equally well to prime costs or capital 
outlays, and to annual charges based on capital expenditures. Of 
course, the costs read from the diagram are different in the two 
cases, not only in numerical magnitude, but also in kind. In one 
case they are sums of money, in the other they may be sums of 
money per year, or money per year per horsepower, or money per 
unit of work, or money per unit of weight of working fluid used; 
and the unit of time involved may be a year, an hour, or a minute. 
The arithmetic magnitudes and the kinds of the constants K will 
differ correspondingly. Professor Smith has thus theoretically laid 
down "the elements upon which must be based the solution of the 
problem of maximum commercial economy. Of course, it can not 
be expected that such general solution should be extremely simple, 
because commercial economy is influenced by many concurrent fac- 
tors. It is essentially a complex thing, and no theory of it which 
was very simple and elementary could possibly be true/' 

Several other methods of analyzing the effect of inherent effi- 
ciency of equipment on operating economy have been made by 
various writers putting stress on one or another phase of the question, 
of which Grinevetsky's method of graphic analysis of working process 



74 

of a steam boiler has so many useful applications that a somewhat 
lengthy description of the same is given in the Appendix, on page 425 
while Figures 22, 23, and 24 represent solution of the problems by 
this method. Messrs. Stott and Gorsuch M offered an empirical 
method for compensating the effect of local dissimilarities of plants 
in their relative economy but unfortunately they treated this impor- 
tant subject too superficially and only for an exceedingly limited field 
of application. The writer approached the sub j ect from a . some- 
what different angle in his earlier work on predetermination of power 
plant costs 27 and the method employed is described in Chapter X, 
relating to costs. 61 

The outstanding fact however is that in any case when the in- 
herent efficiency of equipment is a factor, clear distinction should 
be drawn between the theoretical maximum thermal efficiency of a 
unit or combination of units and the practically attainable maximum 
efficiency as limited by local conditions in a given plant. For instance, 
the theoretical efficiency curve of the turbine may be several per 
cent better than the maximum attainable due to limitations created 
by condenser, worn out blading, etc. Thus, for instance Figure 25 
represents the deviation of actual performance test of a two-year old 
turbine from the theoretical or rather "guarantee" performance, 
while turbine test curves, Figure 26, obtained by experiments were 
more or less a surprise and various theories have been advanced to 
explain unexpected dip at 26,000 kilowatts load and another at an 
overload. Lastly Figure 27 represents a comparison of actual ther- 
mal efficiencies of six power installations, as obtained and published 
by different observers; balancing fixed charges per hour against 
capitalized B. t. u. input in each case may serve as a rough guide for 
a selection of the best commercial economy of installation. 

On the other hand in all such questions confusion must be avoided 
between maximum thermal efficiency and maximum commercial 
economy, the criterion in each case being different. It is very often 
the case that the operation of a plant at its maximum thermal effi- 
ciency is less economical from the dollar viewpoint than at somewhat 
lower thermal efficiency. This consideration brings us face to face 
with the effect of the time-factor in production on one hand and 
with the necessity of a separate and distinct treatment of the greatly 
confused conception of "economy," on the other. 

Economic Conception 

In order to be able to accurately measure the economic advantages 
of the various means of production employed, we must first agree 




Fig. 17. — Restful Seats for Firemen 

Even such simple arrangement for seats between coal bins is an improve- 
ment. Bench is provided with back both for rest and protection from draft from 
under gangway; stands provided for lunch box and smoking material. Note the 
posture and expression of men. 



150,000 



140,000 



130,000 



«eo,ooo 



110,000 



100,000 



|! 90,000 
o 

~ eo,ooo 



70,000 



60,000 



50,000 



£,000 



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Fig. i 8. — Two Characteristic Load Curves 
Any comparison of operating performance of these two electrical Central 
Stations would be fruitless of results unless the character of the load is taken into 
account. In a Philadelphia case, the ratio of maximum to minimum is 28.3 while 
in Cleveland it is 15.3. Moreover, the changes of load are rapid in the first case 
and slow in the other. 



7 6 

as to what constitutes the measure of economy. On the surface the 
proposition appears very simple: the product is a factor of time 
while the value of the product is also a factor of expenses incurred 
in production; therefore the economy coefficient may be simply rep- 
resented as a ratio : 

Product 



£ = 



Cost of production X Time of production 



This relation visualizes the well-known fact that the economy of 
production increases with reduction of manufacturing expenses or 
increased production per hour and decreases with the increase of 
time consumed. In the field of power production this relation is 
further accentuated by the thermo-economic peculiarities of some 
of the equipment engaged where further reduction of economy is 
caused by the increase of time required for generation, i. e., thermal 
efficiency usually drops when the boilers, turbines, etc., are working 
below the capacity known as most economical load. Another specific 
limitation frequently enters the problem of power generation, i. e., 
the drop of efficiency with the reduced time of production beyond a 
certain capacity limit (overload). 

Thus even from a purely thermodynamic standpoint the economy 
of one or another type of equipment depends upon at least three 
variables: temperature (initial and ultimate), pressure (initial and 
ultimate) and time rate of production (rate of driving, load, etc.) 
Commercially the economy of a given equipment is determined also 
by (a) fixed expenses incurred by its ownership, (b) constant ex- 
penses involved irrespective of the rate at which it is used and (c) 
variable expenses representing the cost of operation at different rates 
of its usage. While the last two groups will be discussed at length 
elsewhere in this book, the expenses of ownership must be considered 
at this juncture as, generally speaking, they are unalterable by means 
of operating or managerial practice in the limited sense of those 
words. 

While the plant and equipment is a tangible asset, it carries with 
it definite financial obligations such as rent on space occupied, hous- 
ing, interest on investment, insurance, amortization of value of 
plant and equipment depreciated due to wear and tear, etc. What- 
ever the amount or percentage thus due to the landlord and the 
money-lender may be, it presents a definite problem. In its elemental 
form the problem may be illustrated as follows : one kilowatt of 
plant capacity carries N dollars annual burden; this one kilowatt 
capacity may be used either one hour during a year or 8760 hours 



77 



and hence, may be instrumental in producing anything from one 
to 8760 kilowatt hours of electric energy. The query is thus where, 
within the following limits, shall the overhead per unit of output be : 



->*>*4- 

i 8760 



Again the matter does not end with establishing the value of N 
as determined by all the tangible assets for there are various intangi- 
ble assets, which also may be capitalized on the books and claim the 

6,000xl0 6 



1 ou,uw 








iad fifin "" .... — '-4 .... 


I*K/,UUU _ _ , 


A 


_ — ~ --■ 




ton onn - 


1 Cv,Uvv 


— — 






i nr\ nr\n _ - 


• 1 00,000 TOTAL BTU - 


1 — D FHf A A/D ~ 


■ft- _ UCPlAKriU. _ _ 


5 "" " — 


•> an nnn - 


£ OY,WU _ 





" — — — — —_ 


= — 


&n nnn 


00,000 _ .i T p nT .- 


VU I 1 U /• _ P" 


KILOWATTS-*- 


-_ _ j- if - " 


at\ nnn — - — "" - ~ - 


TU,Ul/U _ _ _ 




— — ™_ — __ — 




?n nnn == ~ 


CV,WU — — ■ _ - 


™ ~ _ _ 


_ — — 




n 1 .._ _ 



14:000 



■ie,ooo 



10,000 £ 

•x 

8,000 1 

D 
-4- 

6,000 co 



4,000 

e,oooxio 6 



7 & 9 10 II 12 I 
A.M. Noon 



U4567 
P.M. 



8 9 10 II 12 I 
MN. 



2 3 4 5 



6 7 
A.M. 



Fig. 19. — Load Curve and Heat Input Balanced 

Diagram of half hourly demands for heat-energy and corresponding output'in 
kilowatts for a representative day. Traction load. 

right of earning income as soon as this ceases to be merely a book- 
keeper's notation, and is covered with some form of corporation 
security, preferred stock or bonds for instance. If such is the case 
and this source of income is accepted and approved by the public 
authorities it becomes a legitimate overhead charge, and is counted 
among necessary costs and is included in N. Consequently, what- 
ever the method of determining X which the consumer shall pay as 
portion of the price for the concern's offer of commodity and serv- 
ices, it is moved within higher limits. 

On the other hand, if for the moment, we assume that the over- 
head or fixed charges should be entirely absorbed by some suitable 



78 

distribution over the product, whatever the output may be, the over- 
head per unit will be lowest with the maximum output and also with 
the minimum investment per unit of productive capacity, the latter 
however, as we have already seen, having an influential bearing on 



20 


















1 






l& 


















































le 


















1 
































14 


























\ 
























12 
o 












































j> BIU.PERNET 


Q 

X 




















SKW-HR. HEAT 
BALANCED 












A> 


faB 












3 

-*- 
* 8 




BC 


>ILER 






























*~ENi 


WE/ 


WM 










6 






A 


T' B 




































































*r 


























Z 


1 




LEX/- 


'AUS) 




TOTA 


L TOFEED 
HEATER . 


VATEfi 


i 






f\ 


IOTA 


















r\ 

























20 



40 SO 80 

Plant Input-Output Lines 



100 



*5 
o 



!20 



Fig. 20. — Input and Output Lines of a Plant 
A study made at the plant of the Interboro Rapid Transit Company of New 
York, shows these interesting economy curves. Note the waves in curve of 
B.t.u. per net Kwh. and compare them with the waves of our Standard Cost 
curves as shown in Figures 111-112. 



operating cost as the first cost of more efficient equipment is higher 
than of that which is less efficient and more crude. The interrela- 
tion of these factors is no doubt a complicated problem involving a 
number of simultaneous equations determining final maxima and 
minima, the solution of which is hardly within the competency of 



79 



the average business man, banker or investment broker unaided by 
an engineer and mathematician. 

An economist 5a observing the growing complexity of engineering 
means in the modern business world remarks: "All the while the 

DIRECTIONS:- 

To find unit of 'scale for piaffing K^ :~From 200 on vertical cost scale above 



rt 



To Cost Scale j 

Lb.per p^H 
6q.In 200- 



TO PRESSURE 
SCALE 



TO VOLUME 
SCALE 



draw a line parallel to line Joining 200 on pressure scale to 100, 000 on 
volume scale. The distance from of the intersection on the horizontal 
axis will be 100,000 units on scale for plotting K$ 
To find unit of scale for plotting Kf} : ~ From 500 on horizontal cost 



scale at level of draw a line parallel to line joining 100, 000 on 
volume scale to 200 on pressure scale .'The vertical distance above 
of the intersection on vertical axis will be one unit en scale for plotting K* ; 



Cost y>cqle 



AV.- > -<- 



TOPRESSURE 
SCALE J^ 







TO VOLUME 
SCALE 



H 



?mO}K 8 40,000 60,000 
£ Volume Scale 



8 100.000 Km 
<0 TOCOST 
SCALE 



80,000 100,000 Cu.In. 



K 7 tK 8 S 2 
K 9 -P f 



( Cost of Construction of ang 5/je afang Working Pressure from Nine Constants 

i? */ V 



Fig. 21. — Smith's Diagram for the Determination of Maximum Com- 
mercial Economy 
The description of the method is to be found in text and also in the book on 
Commercial Economy of Steam Power Plants by R. H. Smith. 

progressive shifting of ground in the direction of a more thoroughly 
mechanistic organization of industry goes on and works out into a 
more and more searching standardization of works and methods and 
a more exacting correlation of industries in an ever increasingly large 
and increasingly sensitive industrial system. All the while the whole 



8o 



of it grows less and less manageable by business methods ; and with 
every successive move the control exercised by the business men in 




inl-K! **f] 5 .[-TOTAL HEAT AVAILABLE _ j • -j : j 



/000S 



273 




Loss Due 



Heat Lost by Escape Gases 



\A 



H ^3^fy Incomp/eA 
Combustion 
<5 and in R/rn ice 



Radiation 



300 
200 
100 



~X~ r O, 



Fig. 22. — Diagram of a Test of a Water-Tube Boiler, Gere 

129 sq. meters heating surface. Steam press. 10 Kg. sq. cm. Fuel — Fuel 
oil residue (for velocity of gases and rate of driving see Fig. 23). 

charge grows wider, more arbitrary and more inconsistent with the 
common good." 

In fact, if the only object in carrying on any industry were to 



8i 

win profit, irrespective of what the conduct of this industry gives 
to the community, that industry would certainly die out of existence 
in a very short time. The common good, so far as it is a question 
of material welfare, is evidently best served by an unhampered work- 
ing of the industrial system at its full capacity, without interruption 
or dislocation. The best negative proof may be had in examples 
of what is politely termed "panics" and business depression but 
what in reality are industrial crises caused by the race for profit 
irrespective of the welfare of the community at large. Under such 



Cal, m 2 j m z m, 

90,000 80,000 70,000 60,000 50,000 40JDOO 50,000 ^.fflpOO; jlOWO 



£7777, 

L i_- u- '—i . 



E v \'V. 



J777%\ Natural Draft 
[222 Forced Draft 




3 rtt j Sec 

Fig. 23. — Diagram of Rate of Driving of a Gere Boiler and Velocity 

of Gases in Gas Passages. 

conditions, concerns that assume a broader viewpoint in their per- 
ception of charging overhead to consumers and crippling their pro- 
ductive organization, are not only able to survive the crisis but can 
recover more quickly. The remarkable recovery of the United 
States after the Civil War was thus described by a business man 
of the period : "When the war ended we all knew we should have a 
panic, some of us like Mr. Hiar, expected that the greenbacks and 
volunteers would be disbanded together. Others expected gold to 
fall to 101 or 102 in a few days. Others saw a collapse of manufac- 
turing industry owing to the cessation of government purchases. 
But we all knew a crisis was coming and having set our houses in 
order accordingly, the crisis of course, never came." e8 In fact Dunn's 
Agency reported only 500 failures in 1865 as against 5,900 in 1861, 
the liabilities in the 1865 failures likewise were only one-tenth of 
those in 1861. 

Carnegie's success likewise was justly ascribed to his ability to 
understand the advantages of keeping his productive equipment 
and organization at work during the crisis though probably at a 



82 

sacrifice of overhead charges. With our task of to-day's in con- 
verting war industries to a peace footing the maximum production 
with the highest efficiency and corresponding lowest cost alone offers 




Fig. 24. — Diagram of a Test of a Locomotive Boiler with Schmidt 

Superheater 

Heating surface 106 sq. meters, superheater surface 28 sq. meters, steam pres- 
sure 13 kgs./sq. cm. Fuel — anthracite. 



escape from industrial disorganization. In this work a thorough 
examination of the part the overhead charges are playing in fixing 
prices is of immeasurable importance, particularly bearing in mind 
that the idea of writing ofT the books the charges accumulating by 
equipment for which there is no work, in order not to make the price 



83 

of vendable goods prohibitive, is by no means unfamiliar in Europe. 
To carry on the product the fixed charges of parts of plant formerly 
used for war materials and which are not yet adapted for new 
demands would be suicidal. Moreover, to disregard this principle 
in the power industry, under an excuse that "it won't work" would 
harm the country as much as that industry itself since cheap and 
abundant power for industrial purposes has been proven to be the 



45 



40 17 



35 16 



I *> 



IS 



2L 25 g 14 



to 

in 



20"- 13 



:n 
o 

c 

a> 

15 o 12 

I 

10 II 



10 



S^£?ST^ 







EFFECT OF VACUUM 

7164- LB. STEAM PRESSURE' 
490DE6.FAHR. STEAM.,, 
TEMPERATURE 
26.8 VACUUM 



/S OBSERVED UNDER OPERATING CONDITION 
TESTS - DIFFERENT VACUUM 
TESTS DIFFERENT PRESSURE AND SUPERHEA T 
BUILDER'S GUARANTEE— 



°200 400 600 800 1000 1200 M00 1600 1800 2000 2200 2400 2600 

Fig. 25. — Test Curve of Curtiss Turbine 
2500 Kw. turbine tested after several years of service showed decrease of 
economy. Effect of pressure, superheat and vacuum was studied at special tests, 
the summary of which is also indicated on the graph. 

foundation of industrial prosperity, coincident with high wages and 
freedom from labor unrest. 

As regards the European practice of "dumping," the following 
argumentation of R. H. Smith, professor emeritus of engineering 
in the Birmingham University, England, is of much interest." "If 
the productiveness of certain plants has become greater than enough 
to supply the demand at ordinary prices, either by the increase of 
productiveness of the plant or by decrease of the market demand 
. . ., then the question unavoidably arises whether it is more 
advantageous to throw out of operation a certain portion of 
the plant or to increase the demand either by a general lowering of 
prices or by a spread of the market into new hitherto untouched 



8 4 

regions by sales in these new regions at specially low prices. The 
loss due to throwing part of a plant out of work is greater than the 
simple depreciation. . . . the gross revenue is diminished in pro- 
portion to the plant thrown out, but the establishment charges are 
lessened little or not at all. 

"Now, if this loss by stoppage of plant thrown out of work be 
ascertained to be a greater than that incurred by selling at a lower 
than ordinary prices in extended markets then, as a matter of course, 
the lesser loss will be accepted as the best solution. These lower 
prices do not, even in the extreme cases, mean selling at below real 
cost ; they mean selling at a profit upon the depreciated value of the 
plant. If this were not so, then the other alternative, namely that of 
throwing parts of the plant out of operation, would be adopted. 
The choice between the alternatives is, perhaps generally, decided in 
accordance with the exclusive interests of the shareholders, that is, 
without reference to those of the debenture holders or of the em- 
ployees. In other words, it is decided in favour of profit in the 
narrowest technical sense of the term. But even so, the throwing 
out of work of a staff of specially trained employes who can not 
afterwards be replaced except at inordinate expense is a material 
consideration exercising influence upon the decision; an influence 
precisely similar to that of the stoppage of the plant. If now the 
choice of alternatives were decided in the interest of profit in the 
fullest and largest sense of the term, it is clear that there would be 
much less plant shut down and much more "dumping" than there 
actually is. This is what would happen if the shareholders and the 
employes were identical persons; if the choice were decided in the 
interests of all those who are actually and humanly interested. It 
is because the power to decide such questions necessarily rests mainly 
in the hands of the capitalist owners, that the decision is usually 
made for the best advantage of technical profits and not for that of 
profit in the broad sense of total gain or benefit." 

What has been written before 1905 remains true to-day, more so 
with the growing democratization of industries, except that "dump- 
ing" is being practiced now much more frequently than British 
shareholders were inclined to do a decade or two ago. An interesting 
illustration of the effect of reduced production on the accumulation 
of expenses on idle portion of a plant may be seen in Figures 28 
and 29. Due to the reduced demand of a railroad securing another 
source of electric supply, the plant lost some load, thereby throwing 
a portion of the generating equipment into idleness and at the same 
time increasing the use of a portion of equipment kept for the pur- 



85 



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86 

pose of protection. The increase of total non-use cost appears to 
be $85,000.00 per year while the increase of expense for having spare 
protective equipment $46,800.00. One can readily picture the ob- 
vious advantages which could be derived by the plant and the com- 
munity served by it if the sequence of charts in time were inverse, 
indicating a more extensive utilization of productive equipment and 
consequently useful application of capital invested and of labor and 
material worked into machinery. 

Now, the danger of over-equipment lies not so much in the fact 
that the labor and material was spent for something for which there 
is no demand, nor even that the money idly invested claims an un- 



* 70 
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5 rcr<* 15 z 


25 30 35 40 


45 50 



Kg Water 



wi s Heating SuHbco 



Fig. 27. — Record of Nine Different Boiler Performances 
Some of the tests here represented were made by the author and some by 
Prof. Grinevtzki of Moscow Institute of Technology. They do not represent the 
boiler performance under ideal conditions, but illustrate actual effects of diverse 
influential factors. 



earned income (therefore compelling the consumers to pay some- 
thing for nothing) but in the social evil of having productive capacity 
non-productive. Idle productive capacity means in the last count 
want amid plenty. If the production is less than the productive 
capacity, the product is sold for more than it could be if there were 
a larger output; higher prices overtax the local market at the same 



87 

time that only a part of the equipment is in use; only part of the 
workingmen find employment and total wages are thus reduced ; and 
the domestic buying capacity is diminished. The conquest of foreign 
markets becomes indispensable, but since other industrial countries 
are similarly pressed for export trade, international competition en- 
sues, culminated from time to time in wars. But even then, with 
this "Godsend" of war orders, the productive capacity of modern 



90,000 




20,000, 



15 100 

Rated Load , Per Cent. 



Fig. 27 A. — Heat Inputs in Six Typical Cases 

Summary of tests of actual installations of widely varying characteristics for 
different per cent of rated load. 

means of production was not fully utilized, since with the ranks of 
workmen depleted for armies a very large percentage of the popula- 
tion still did not take any part in the greatly increased output of 
the productive work of the rest of the workmen. During peace 
between the nations equally merciless wars are waged within nations 
when a large portion of productive machinery is held inoperative 
in order to keep the prices on products high and wages low. The 
conflict between labor and capital is thus bred and aggravated by 
this limited use of productive capacity. The experience of many 



88 

electric companies during the war just concluded substantiates the 
above facts if indeed they need any further illustration. 

The power generating capacities of many public utility plants 
were overtaxed; a number of applicants were put on the waiting 
lists; government was asked to finance the enlargements of the 
power plants; the amount of coal consumed for power generation 
broke all previous records; and the amount of power consumed by 
industrial establishments was unprecedented. At the same time 
two millions of men capable of working were unavailable for industry 
and the nearly equal influx of immigrants has practically ceased. 
If , at the same time, an allowance is made for the labor consumed for 
production of more machinery for further production and if the 
amount of labor engaged in production of war articles not needed 
in peace time is next subtracted it will appear almost incredible what 
an insignificant portion of labor and machinery is really used for 
the satisfaction of the present scale of civil needs. At the same 
time we are told by various authorities that existing equipment 
is used not over half the regular working hours and the efficiency 
of its use is far below the possible mark by something like 50 per 
cent in most of the cases. 

Taking again the power industry as a standard, though a large 
portion of power is generated outside the public utility stations, our 
immagination will be almost overtaxed if we consider what an enor- 
mous proportion of productive capacity is being withheld from use 
for the satisfaction of existing needs. To put it in other words — 
the equipment, the investments in the productive capacity have been 
made for the purpose of earning interest, not with the view of 
increasing productivity. The machinery, of course, was to be utilized 
in a measure but that was not the object, merely an incident. An 
economist puts it: "The business man's place in the economy of 
nature is to 'make money/ not to produce goods. The production 
of goods is a mechanical process, incidental to the making of money, 
whereas the making of money is a pecuniary operation, carried on 
by bargain and sale, not by mechanical appliances and powers. The 
business men make use of the mechanical appliances and powers of 
the industrial system, but they make a pecuniary use of them. And 
in point of fact the less use a business man can make of the mechani- 
cal appliances and powers under his charge, and the smaller a product 
he can contrive to turn out for a given return in terms of price, the 
better it suits his purpose. The highest achievement in business 
was the nearest approach to getting something for nothing. What 
any given business concern gains must come out of the total output 



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business concern has an interest in the continued production of 
goods. But the less any given business concern can contrive to 



go 

give for what it gets, the more profitable its own traffic will be. 
Business success means 'getting the best of the bargain.' " 

Or, quoting a speaker at the annual banquet of the alumni of 
Stevens Institute of Technology, 65 "If you went to a bank before 
the war — great things have happened since the war — in London or 
Paris or New York, the question they cared to consider was : 'Can 
you show us how we can derive income for investors out of what 
you propose ?' The mind was riveted to the investor's point of view, 
that is to say, riveted to the point of view of the people who live 
on their income, the point of view of leisure and idleness. I am 
not saying we don't all want to be idle a considerable part of the 
time; but I submit it isn't reasonable that the work of the world 
should be done in my idle moods or from the point of view of 
my idle moods. It isn't safe either for my investments, if I have 
any — not in the long run. If a bank thinks only of the investor 
and doesn't think of the improvement of the working plant upon 
which all securities rest, sooner or later the working plant clogs up 
and grinds its own cogs and the investments are forfeit. 

"It is largely because of the false practice of the financial com- 
munities of London, Paris, and New York, that we have a grave 
social problem. The great bankers are all conscientious and well- 
meaning men, so far as I know. But they have in the past been 
indoor men. They have lacked the outdoors point of view. They 
have absorbed their minds in the figures in a book, without an 
adequate conception of the external world. Here and there there 
have been exceptions ; here and there somebody did think of the 
practical arts, but in the main, they didn't care for technology or 
for building of cities. They did not look at things from the point 
of view of the entrepreneur or the engineer. There wasn't any 
engineer in the bank." 

Since this was said and written, many things have begun to 
change under the influence of the lessons taught by the war. Some 
banking institutions begin to realize that investment for the sake of 
investment is neither profitable nor safe so long as the economic 
structure is getting top-heavy from piled over-head charges on idle 
equipment. Moreover, they begin to seek the advice of an uninterested 
engineer as to what is a productive enterprise for they begin to 
realize that the new field of credit is being opened on the basis of 
what the plant or man can do, instead of the old criterion of what 
it can be bought or sold for. The valuation of industrial methods 
gains its recognition over valuation of industrial property 88 while 
but a few years ago the author's paper on the subject fell on the 



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deaf ears of even the most progressive ones. On the other side of 
the Atlantic a similar reshaping of ideas is taking place. The British 
Ministry of Reconstruction clearly sees and does not hesitate to 



92 

state 56 that "the old standards are definitely changed, as was the 
inevitable outcome of a war to make democracy safe. A man is 
judged to-day not by the size of his banking account but by the 
record of his deeds." 

To gain the correct conception of the value of the plant both for 
investors and the public, one should know more than its physical 
properties — a valuation should be made of the mode of its use, and 
that is primarily the method of its operation. 



Chapter IV 

MASTERING MATERIALS 

APPROACHING the second group of questions involved 
in the problem of mastering power production; namely, 
those relating to materials, supplies, and other technical requi- 
sites, it would be fitting to begin /by drawing a clear distinction 
between materials as marketable 7 commodities and materials as 
products of socially necessary labor. In the former aspect, ma- 
terials are subject to market speculations and have a merely 
pecuniary value; their loss or waste or misuse is measured in 
their money equivalent. From the second standpoint any ma- 
terial, whether so called natural resources or fabricated supplies 
and parts, represents certain amount of human labor-power, and 
waste or misuse of materials thus regarded is a loss of human 
life. Loss of money equivalent of materials may be recom- 
pensed through some other financial operation ; loss of material 
itself is an irretrievable loss of time and human energy spent in 
its production even if the residue of misused material may be 
again, by application of more labor, worked into some useful 
form. 

A financier, a business man, concerns himself solely with the 
first meaning of materials and from the business view materials 
are only forms in which portion of variable capital engaged in 
production appears. It is the business of an engineer to reckon 
materials in their true nature, that is as to their peculiar fitness 
for the production process involved. The social meaning of 
materials does not receive its significance so long as proper use 
is made of it, which means that the amount of labor-power 
worked into it finds its expression in the ultimate result to which 
it was applied, being diminished only in such a degree as the 
existing state of art and the limitations of the nature of the 
process makes it unavoidable. 

While it is common to measure any kind of useless ex- 
penditures of time, materials and efforts in terms of money 
equivalent that were spent without producing material results, 

93 



94 

the true social meaning of waste is at once deeper and broader 
than mere loss of money. In fact one conception does not 
necessarily cover the other. Take for example a steam-electric 
plant that ordinarily consumes one-third more coal per kilo- 
watt hour than it would if more knowledge were displayed and 
more care exercised. This means that its coal bill is one-third 
higher than it might be, thus a corresponding amount of money 
is apparently wasted. Yet the financial interests of the investors 
are protected insofar as they recover this loss of uselessly de- 
stroyed fuel by including this amount of money into the price 
of electricity sold. Public utility commissions either have their 
hands tied or are otherwise incapable of determining how much 
coal should be used and consequently rates are approved when 
based on high consumption of coal per kilowatt hour whereas a 
reasonable figure would be much smaller than commonly found. 
The community consuming this electricity pays therefore back 
to the owners what they overspent on coal item. The net result 
is, of course, that the money representing the value of wasted 
coal keeps on circulating and the community, so overcharged for 
electricity, also pays wages to coal miners and profit to operators 
and railroads on the amount of unnecessary coal, which was burned 
without producing and serviceable energy. 

In fact it might well be assumed that the electric company 
collecting in this fashion a greater bulk of revenues than it 
would with smaller operating expenses, has a somewhat higher 
operating capital and consequently claims even at the same 
rate of interest, a greater bulk of profit. Furthermore, a situa- 
tion may be elaborated in which the larger expenses (inflated 
by cost of waste) yielding revenues allowed by commissions 
being interpreted as an indication of growing business, this 
may further be capitalized as good will or some other intangible 
asset, and eventually covered by an issue of securities and thus 
ultimately bring further income. Study of various records of 
hearings held by different public utility commissions brings ample 
evidence of such practice, which incidentally, is being fre- 
quently referred to by speakers in the engineering societies as 
"penalty imposed on the community for tolerating inefficiency" ; 
"price of waste and mismanagement paid by the country," etc. 

While some economists may deny these terse charges by 
pointing out the increased money circulation resulting, the facts 
of the other side of the proposition remain, that the natural 
resources, through their misuse, are wasted and the work of an 



95 



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I9J3 ,1914 1915 1916 . 1917 1918 1919 1320 1921 
Ye a r 

Fig. 30. — Wholesale Prices of Representative Coals 



96 

endless chain of men is applied to produce something that serves 
no useful purpose. In other words, a certain amount of work 
is rendered unavailable for production of some much needed 
commodity or service. In the modern structure of the industrial 
community, with its closely correlated branches and fields of 
activity, specialization is so complex that an attempt to trace 
the effect of misuse of any specific material is well nigh im- 
possible, except in the most general terms. A poor combustion 
of fuel in a furnace for instance, at once renders the work of a 
great number of men useless and unavoidable for other purposes, 
for coal represents labor of a long chain of men — to name but a 
few: lumbermen, teamsters, steel-mill workers, machinists, 
chemists, railroad men, engineers, clerks, miners, since the 
work of all these was absolutely indispensable for mining and 
delivering coal which was burned under the boiler without pro- 
ducing all possible steam. Moreover, the work of none of 
them would have been possible unless scientists, architects, cat- 
tle-men, shop-keepers, textile workers, tailors and what not 
had toiled so that others could do their part in this enormous 
working community of the modern state. From this standpoint 
any waste of coal or of any other material means that a certain 
amount of the work of all these numberless men, whose work 
intricately depends one upon the other, is rendered useless. This 
in turn means that the time they toiled to produce something 
that is thrown away, was not used to anybody's good. As this 
waste is considerable, the sum total of the portions of time that 
all the men worked to produce something that is wasted is very 
large. 

In order to grasp and visualize the extent of present day 
losses of coal alone in our power industry we must consider that 
out of upward of 400,000,000 tons of coal used annually for power 
production at something like 75,000,000 tons are used needlessly 
and could be saved by scientifically adjusted methods of master- 
ing power production. The diagram Figure 30 represents the 
fluctuations and general trend of wholesale coal prices as re- 
ported in the Journal of Commerce and Finance, published by 
the National Bank of Commerce in New York. At an average 
price of $5 per ton this reckless dissipation of fuel in power pro- 
duction cost to the nation $375,000,000 annually, not counting in 
the expenses of transportation, handling, etc. To avoid this 
waste of materials no new equipment is needed, no radical change in 



97 



the conduct of industry is involved — it calls merely to practicing 
principles advocated in this volume. 

Turning now to the social significance of this material waste 
from the viewpoint of possibilities of putting power production 
on a new basis — coupling it with the multiple production of 



& 416 ,800,000- 



400,000,000- 



350,000,000- 



300,000,000- 



250,000,000- 



.2 200,000,000- 
.0 




o 



150,000,000- 



100,000,000- 



50,000,000- 



mMmmm 

*<x(3AS USED IN ^jk 
^DISTILLATION^ 




Fig. 31. — Relative Values of Coal By-Products 

Approximate relative commodity values of by-products of low temperature 
distillation of coal lost when raw coal is used as fuel. Based on recovery from to 
of normal annual consumption of raw soft coal. Prices subject to large fluctua- 
tions. 

various by-products of coal and thus deriving, besides more 
power, a large quantity of other useful and badly needed com- 
modities, we must consider the following facts : the mining of 
the minimum quantity of coal that may be readily saved, say 
75,000,000 tons annually, employs uselessly the labor of about 100,- 
000 coal miners, and the haulage of 5,000,000 car-miles, in addition 



9 8 

to a large amount of other labor and material required in connection 
with the mining, transportation and building and maintenance 
of equipment employed in this unproductive output. 

The further great values to the nation which go up in 
smoke with this wanton waste are seen from a computation of 
all the useful elements that are extractable from bituminous 
coal: in one ton of bituminous coal, if split by distillation, its 
multiple products would have had a collective value of at least 
$16, or about eight billion dollars per year. 

In terms of cash, the price value of the minimum of the 50,- 
000,000 tons of coal wasted yearly in power production alone — 
not taking into account the large tonnage wasted in connection 
with other uses — had the value of the multiple products of this 
coal over $800,000,000, probably $1,200,000,000. 

In terms of social value, the same coal wastage represents a 
loss of about 35,000,000 tons of smokeless fuel or coke, 500,000 
tons of ammonium sulphate, 100,000,000 gallons of benzol, 
400,000,000 gallons of tar. Transferring these amounts into 
other values, we find that the nitrogen contained in 500,000 tons 
of ammonium sulphate is capable of raising the production of 
wheat by 43,316,000 bushels, based on 115 pounds of nitrogen 
to the acre. Benzol is superior to gasoline and the above amount 
is valued at about $30,000,000, capable of accomplishing an enor- 
mous amount of mileage of trucking and traveling. The 400,- 
000,000 gallons of tar would make possible the extension of rural 
highways, and keep the present roads in good condition. The 
above examples concern only the primary products while other 
chemicals, drugs, dyestuffs, etc., could be extracted. 

The gravity of this situation and public responsibility in the 
matter will only be met when the facts become generally known 
and appreciated. Already a small number of progressive con- 
cerns, employing expert advice and organizing their power pro- 
duction along more intelligent lines, are eliminating this wanton 
waste. 

Figure 31 represents graphically the values of primary by-prod- 
ucts of 35,000,000 tons of coal, i e., if less than half of coal now 
wasted could be subject to this slow destructive distillation. In 
this case the value added by manufacturing of raw coal is $416,800,- 
000 per year even if a ton of coal is priced at $5 per ton while the 
by-product prices are as low as they were in 1917, i. e., am- 
monium sulphate 3 cents per pound, benzol 28 cents per gallon, 
tar at 3 cents per gallon, and gas at 90 cents per 1,000 cubic feet. 



99 

In procuring materials for industrial purposes and more spe- 
cifically those needed in the manufacture of power, the criterions 
applied in selection are necessarily determined by the light in 
which the materials are regarded. As in the case of the selec- 
tion of equipment, whenever the financier or business man as- 
sumes the authority of deciding the question unguided by knowl- 
edge of technical peculiarities of the processes involved and the 
specific requirement of the materials used, he almost invariably 
displays more than mere ignorance for, by the force of habit and 
training in a different field, he judges from the viewpoint of a 
bargain, that is, he usually displays an inclination to buy largest 
bulk for cheapest price. Another customary fault of narrow busi- 
ness judgment is that choice of materials is made without due regard 
to broader economic considerations. 

We have come to inherit from the historical development of 
our economic structure the idea that the privilege of control of 
purchases is vested with owners of money. With the highly de- 
veloped technique of industrial processes and accompanying 
complexity of requirements for materials and supplies used, 
the insistence of business directors that they have a say on 
how their money should be spent in the procurement of ma- 
terials, is becoming more and more discretionary, arbitrary 
and at times ridiculous, not to say that such direction may be 
wise only in cases when the business head of the concern and 
technical expert is one and the same person. That the unsuit- 
able or ill-adapted materials cause a loss is seldom apparent to 
a business head whose judgment of efficiency of an undertaking 
is based on the accountant's reports or trial balances perhaps 
elucidated at times by statements of bills payable for materials. 
The effect of unsuitable materials on the thermal or other effi- 
ciency of the process in question, on cost of maintenance, on 
hardships imposed without returning benefits on the employees 
and even on the unit cost of production, is often obscure to men 
whose skill consists in the ability to buy cheap and sell dear, 
not in producing efficiently, in keeping up plants in best operat- 
ing conditions, and in relieving the men from all unnecessary 
strain as well as in eliminating every possible source of waste. 

Purchases 

The gap between the control of finances and the control of 
production grows wider with the development of technique and 
inconsistency of directing purchases merely from the standpoint 



IOO 



of "price per" has forced the delegation of a portion of this 
authority to especially appointed purchasing agents or depart- 
ments. Nevertheless the fundamental inconsistency often re- 
mains intact inasmuch as even these purchasing agents often 
have to report and receive their orders from the business officers 
and not from the production experts. The gap of late is be- 
coming narrower, both through adoption of standard specifica- 
tions worked out by specialists, and supposed to direct the buyers 
and through a measure of latitude given to the heads of pro- 
ductive departments to "recommend" or even "specify" the 
qualifications of materials wanted. As a rule this practice of 
co-operation and engineering direction produces vastly more 
satisfactory results than the former custom of plenipotentiary 
rule of purchasing agents yet, in cases of some special depart- 
ments, particularly so-called auxiliary departments, such as fac- 
tory power plants are, it is still the custom that coal be purchased 
without the knowledge of the plant engineer ; the question of 
what kind and grade will best serve his purpose being often 
decided by discussion between a banker, a sales manager, and a 
superintendent of a manufacturing department. It is entirely 
possible, in such and similar cases, that the plant engineer, who 
was hired probably chiefly because he did not ask high wages, 
does not himself know what fuel will best suit his furnaces, and 
he knows even less where and when the fuel is obtainable, so that 
an outside specialist's investigation and advice is gradually be- 
ing more frequently resorted to whenever the small volume of 
business does not warrant the permanent employment of an expert. 
Some aggressive selling organizations not infrequently take 
advantage of the situation which arises whenever the purchaser 
has no one on whose wisdom in selection he may rely; the 
salesman in such cases brings in his own "expert engineer," who 
has little difficulty to represent the goods or the services of his 
employer in a most convincing way to buyers confessedly un- 
sophisticated in technical matters. At times this practice as- 
sumes especially tempting forms, as when the closing of a con- 
tract is stimulated by an offer of "free" service or at a "nominal 
charge." Sale of coal on that plan at one time gained popularity 
though gradually it is falling into disrepute as might be an- 
ticipated, for during a competitive trial of a coal offered under 
the direction of coal company's expert, results could be easily 
obtained that are far better than the boiler room force could 



IOI 



duplicate unaided or, especially, maintain afterwards in every 
day operation. Likewise purchase of equipment, supplies and 
apparatus according to similar plans is not always satisfactory 
to the users partly because they permit themselves to be talked 
into a belief that its use will result in a real economy merely on 
the virtue of machine itself irrespective of the mode of its use. 
Thus often the disappointment is well-deserved and the sales en- 
gineers must be exonerated from great portion of responsibility for 




10 11 12 13 14 15 !6 17 Yd 19 20 25 30 35 40 45 50 55 60 65 70 75 80 90 

Cost of Fuel for Evaporating 1000 Lb. of Wafer from and af 2i£ Decj.Fahr.jjn Cerrb. 

Fig. 32. — Cost of Fuel per iooo lbs. of Steam 

Diagram for computing the cost of fuel used for generation of 1000 lbs. of 
steam at various boiler efficiencies based on different prices paid per million B.t.u. 
in shape of fuel. 

exaggerating the merits of their goods. The reason that the promised 
results are not actually obtained is the improper method of use. A 
manufacturer of a C0 2 recorder had shown to a writer a complaint 
from one user of his apparatus who blamed the recorder for 
not improving the efficiency of combustion ! 

The authority to make the purchase involves responsibility 
for the suitability of materials or article bought for a certain pur- 
pose. It is as much a waste of public funds and labor to install 
in the plant something that does not serve its purpose as it is 
to destroy the corresponding value of labor or its product. In 
other words, possession of plant and materials involves a social 



100 



102 



obligation to see to it that the plant is put to the best possible 
use. If the knowledge available is insufficient to attain the best 
results possible, additional knowledge should be secured. 

The World War has taught us that it was not the ability 
to buy, but to produce that insured success. In war the better 
mastering of materials secures victory ; in industrial competition 
the waster is the loser ; in social progress that community attains 
the highest standard, which gets most out of its material re- 
sources. To accomplish this task, it is necessary to eliminate all 
guess, uncertainty, favoritism, and waste; a definite, predetermined, 
impartial and efficient use of materials is a conditio sine qua non of 
success. 

As long, however, as our industries and public utilities are 
controlled by men whose vision is limited to a narrow circle 
of private gains, small wonder that the representatives of the 
people gradually extend governmental control over them. The 
feeling of distrust is spreading toward managerial methods based 
upon obsolete ideals and fostered by the conditions of the past and 
the right to mismanage socially necessary production and trans- 
portation or to waste the Nation's natural resources, is being 
gradually taken away. 

Prices vs. Use Value of Materials 

The most conspicuous of these harmful inheritances from the 
age of mercantile capital is the habit of judging the value of 
services and of goods alike from their market price. Men who 
are traders by profession and speculators by temperament, are 
accustomed to accumulate wealth by buying cheap goods and re- 
selling them for what the traffic will stand. The process is thus 
to transform money into commodity and exchange it later for 
a larger sum of money. The buying of certain materials needed 
in the process of power production is done with the intention of 
realizing larger returns when the raw material reappears in 
the new form of a marketable commodity ; namely, energy. As 
a mere bookkeeping proposition, it looks as if the lowest price 
paid for these materials is capable of augmenting the profit, or 
the difference between the cost-price and the market-value of 
the power. A technically unsophisticated purchasing agent, or 
an official dictating the policy of a concern, is often trapped in 
the tenets of this fallacy. While it might be true in a case of 
direct reselling of merchandise, that the low purhase price 



103 

leaves a larger margin for profit, in the case of materials entering 
into a process of power production, the price of the materials 
per ton, or pound or per foot, etc., has little or no bearing on 
the cost of ultimate product-power. The only reliable criterion 
of the price of material is its effect on the unit cost of ultimate 
product. Thus nothing but scientifically conducted experimenta- 
tion under service conditions and carried out by a trained en- 
gineering investigator can establish the fact as to what article is 
cheapest to use as opposed to what is cheapest to buy. 

The purchasing agent should be directed only by properly 
established engineering standards ; to permit of their timely revi- 
sion, he should report to the engineers setting the standards any 
fluctuations in the purchase prices, deliveries, specifications, etc., 
of all catalogued materials. It is hardly necessary to illustrate 
this assertion by examples only too well known to operating en- 
gineers, but often foreign to financial directors. A cheap grade of 
lubricants or anti-friction metals, of boiler tubes or fitting, etc., 
does not only enormously increase the maintenance expense but 
seriously jeopardizes the safety of men and property and, above 
all, frequently causes interruptions in the service with all their 
far-reaching consequences. 

Of all the materials used in the steam power plants the fuel 
for the reason that it is by far the largest item in the operating 
expenses, attracts the most attention to the problem of its selec- 
tion. 

Coal As An Example 

The most primitive method of selecting coal is the com- 
parison of prices per ton. This is occasionally modified by legal 
regulations, security of deliveries, terms offered in the contract, 
and similar commercial considerations. Thus in New York 
City the use of anthracite has been favored and even made obli- 
gatory so long as law-makers believed bituminous coal to be 
smoky; in Maine, Pocahontas and New River coals were in 
vogue, even in unsuitable furnaces, since little ash may be 
hauled over the long route; in Pennsylvania, sometimes unsuit- 
able coal is brought from far away mines because of a lower bid 
per ton on a long-term contract. 

In the first decade of this century the methods of buying bi- 
tuminous coal on a heat value basis became fashionable. The 
more conspicuous of these methods were those of the United 
States Geological Survey, the Panama Railroad Company, the 



io4 



Interborough Rapid Transit, City of New York (See Appendix 
2) and the Celluloid Company. It was as much a step in the 




10 20 30 40 

Percentage of Carbon in Refuse 



50 



60 



Fig. 33. — Relation between Ash Content and Furnace Refuse 
Diagram for approximate determination of furnace refuse to be expected from 
coals of different ash contents with various percentages of loss of combustible in 
refuse; it may similarly serve for estimation of percentage of carbon lost in refuse 
from known amount of refuse and ash content in coal. 

proper direction as the selection of food according to its caloric 
value though the parallel goes still further. A dietician knows 
that foods of equal heat value have different coefficients of 



io5 

digestibility; moreover, there are proteins that stop animal 
growth while others stimulate it. While again, some nourish- 
ing foods are not palatable. Similarly it is not enough to know 
that a million B. t. u/s cost so much and the price may be further 
adjusted according to the variation from the "normal" proximate 
analysis. The fitness of the coal for the furnace, service, local 
conditions, etc., must be carefully investigated before it may be 
said whether the coal containing the most heat units for a penny 
is the cheapest. 

Unquestionably the great merit of this method of payment 
for coal on the heat value basis lies in the fact that it calls for 
some exact knowledge. The knowledge of the quality of every 
delivery on the part of the buyer" stimulates the seller to exercise 
care in the preparation of the order so as to avoid penalties; 
eventually the knowledge of the effect of the composition of coal 
on the ultimate results obtained, helps the user to adjust specifi- 
cations to requirements or vice versa to modify the methods of 
use or equipment to the character of fuel available. Neither of 
these adjustments could be made without a knowledge of the 
characteristics of the coal. Moreover, the contents of the coal, 
the behavior of the volatile matter in the furnace, peculiarities 
of ash, etc., must be known before the coal is used, since varia- 
tions in the properties of coal call for different rates of air supply 
in the furnace in order to properly burn the coal; shorter or 
longer periods between leveling or cleaning fires, different thick- 
nesses of fuel bed, etc., must be standardized if high efficiency is 
to be attained. 

The importance of the information obtained from the coal 
laboratory could hardly be emphasized enough, and a modest 
investment for its simple equipment is perhaps the best invest- 
ment after the boiler room instruments, from the viewpoint 
of economy, as well as of conservation of natural resources. The 
employment of an outside laboratory, however, is warranted only 
in a case when the analysis returns may be made available be- 
fore the coal is used in the boiler room. The knowledge of what 
kind of coal has been burned is no consolation if the methods 
of its utilization were guessed wrong and resulted in an excessive 
waste. 

Engineering Direction of Purchases 

To further illustrate the nature and the extent of the im- 
portant role that an engineer should play in directing purchases 



io6 

of materials and supplies, we may again refer to our example of 
coal. Engineering furnishes scientific means for determining 
with precision the measure of waste and of preventable losses 
in productive processes. These wastes and losses are large 
in the ordinary process of power generation. In this process 
the engineer has to consider primarily three stages : 

1 The purchase of fuel, including receiving, storing, and 

handling. This is the transformation of money into po- 
tential thermo-chemical energy. 

2 The combustion of the fuel under the boilers. This is 

the transformation of potential thermo-chemical energy 
of solid or liquid fuel into the gases in the furnace. 

3 The utilization of the heat generated in the furnace for 

the evaporation of water in the boiler. This is the 
transformation of the heat of the gases into the volume 
energy of steam. 

Figure 32 illustrates the correlation of these three factors : price, 
efficiency, and cost. 

The first of these stages, the purchase of fuel, is usually char- 
acterized by great inefficiency, although it is true that it may be 
profitable to tolerate low efficiency if the cost of the product 
is low. The efficiency of a beam engine is much lower than that 
of a triple-expansion condensing engine, but sometimes the con- 
tinued use of the former is commercially more economical. 
Analogous conditions may be observed in burning fuels of vary- 
ing grades and prices in different types of furnace. 

The prices at which some kinds of coal are sold are not propor- 
tionate to their thermo-chemical value. In other words, though in 
the cheaper kinds of coal there are fewer B. t. u. to the pound, yet 
one cent expended for such coals buys more heat. The possible 
commercial advantage from the use of these cheaper and poorer 
grades of fuel (screenings, breeze, culm) is, however, diminished 
by the increased cost of maintenance and heavier depreciation of the 
special apparatus which are necessary to enable us to utilize the maxi- 
mum heat units obtainable from this fuel. It is therefore sometimes 
more profitable to use more expensive fuels, which can be satis- 
factorily utilized without additional expense for apparatus. Finally, 
cases are never met with in practice where the resultant efficiency 
could not be increased by a more complete utilization of the fuel in 
the furnace, though there are many cases where this source of poten- 



107 

tial saving is negligible in comparison with the large economy ob- 
tainable by changing the coal specifications. 

For our purpose, that is, the determination of the efficiency of 
coal purchase, three steps must be examined; that is, we must find 
first the efficiency of payment, that is whether the price is reasonable 
and how it compares with other offers; for this efficiency we may 
use the symbol E m . Second, efficiency of gastification, that is, whether 
all that is combustible in the given fuel may be made available; for 
this we may use the symbol E a . Third, efficiency of heat utilisation, 
that is, whether the gases are thoroughly consumed and whether 
they deliver all their heat, or whether some of them are incom- 
pletely burned or are carrying away heat which might be utilized 
under attainable conditions; fonihis we may use the symbol E t . 
These financial, chemical and thermodynamic factors of the total 
resultant efficiency of fuel . (E r ) converted into decimals, may be 
expressed in an equation which is universal for all kinds of fuel 
under all conditions: 

E T = E m X E 9 X E t i 

In each of the three primary stages we have just been considering 
we can differentiate minor or secondary stages, standing to one 
another sometimes in the relation of dependent sequence, sometimes 
in simple correlation; these should be analyzed in conjunction with 
their corresponding primary stages. Thus, both theoretically and 
practically, nine typical variations are possible in the underlying 
conditions that affect the resultant commercial efficiency of the fuel 
— that make it possible to increase this efficiency by proper selection, 
purchase and utilization of fuel. 

In recent years we have often heard the statement that "coal 
should be bought on a basis of the result it will give; that is, on 
the basis of thermal units." " This statement is true only as to the 
first part; the purchase of coal, like any other purchase, should 
depend on the purpose to be achieved, and it should be remembered, 
of course, that the results obtained depend upon the adaptability 
of the fuel, chemically and physically, to the furnace in which it 
is to be burned. It is well-known that certain coals are especially 
suited for certain purposes, and it is not necessarily true that the 
coal highest in B. t. u. will be the best for our special purpose, even 
though it be completely burned. For instance, coals high in volatile 
matter are the most difficult to burn efficiently, although they are 
high in B. t. u. Furthermore, coals having nearly the same per- 
centage of volatile matter may have different heating powers on 



io8 

account of the presence of heavy hydrocarbons, or such volatiles 
which are not combustible at all. 

It is not necessary at this time to go deeply into the peculiar 
art of establishing standards. For illustration only, let us assume 
that 1,000,000 B. t. u. in steaming coal could be bought for 5 cents, 
while the actual price paid for two kinds of steam coal offered to a 
certain plant are 6 cents for 1,000,000 B. t. u. in small-sized anthra- 
cite, and 8 cents for the same potential thermal energy in bituminous 
coal; then the financial efficiency in these two instances will be 83.3 
per cent and 62.5 per cent, respectively. 

Our second step will be to determine the efficiency of gasification 
of the coal we are considering. In other words, we must apply 
exact methods of calculation in order to determine the ratio of energy 
utilized to energy available, this being the ratio to which we have 
given the title efficiency of gasification. Let us assume again that 
under the conditions of our special case the coal purchasable at 6 
cents per 1,000,000 B. t. u. cannot be completely burned, but leaves 
on the grates and in the ash pit 38 per cent of unconsumed refuse. 
This coal shows by analysis 18 per cent of ash. The 38 pounds of 
unconsumed refuse, therefore, which is left by each 100 pounds of 
coal, contains but 18 pounds of absolutely non-combustible ash, the 
remaining 20 pounds (or 52.6 per cent of the entire refuse left) 
being combustible, left unconsumed. The efficiency of this process 
can be easily computed. 100 pounds of dry coal consists of 18 
pounds ash and 82 pounds combustible, out of which 82 pounds we 
are wasting, as we have already seen, 20 pounds. The remainder, 
62 pounds, is therefore the quantity of combustible gasified. The 
efficiency, therefore will be: 

,., Combustible used _62_ 

9 Combustible available 82 

In other words ; the efficiency of our process of gasification is 
75.6 per cent in the case of the coal costing 6 cents for 1,000,000 
B. t. u. Figures 33 and 34 show in graphic form the relation 
between the combustion of coals, the percentage of refuse to 
coal used, the percentage of combustible in the refuse, and the 
efficiency of coal consumption. 

Let us now assume further that the bituminous coal already 
referred to, costing 8 cents per 1,000,000 B. t. u., shows an 
efficiency of combustion as high as 96.6 per cent under the same 
conditions as the anthracite just considered. And let us also 
assume that the efficiency of the third stage (the utilization of 



109 

the products of combustion, or, in other words, the transforma- 
tion of the heat energy of the gases into volume energy of 
steam), is 64.1 per cent in the case of bituminous coal. The 
efficiency of this third stage is determined by actual steaming 
or evaporative test, and is figured in accordance with the for- 



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60 — _ — 



K) 20 30 40 

Percentage of Com bush We in Refuse 



50 



Fig. 34. — Relation of Efficiency of Gasification and Losses of Com- 
bustible in Refuse 

If no combustible is to be found in furnace refuse, it would mean that 100% 
of solid fuel was gasified. Relation between ash and dry coal and combustible in 
the furnace refuse indicates the efficiency of gasification. 

mula given in the code, for conducting boiler trials of The 
American Society of Mehanical Engineers. 

Heat absorbed per pound of combustible 



& = 



Thermal value of one pound of combustible 



We have now all the data necessary for determining which 
coal is the more efficient. A comparison of the resultant effi- 
ciencies of the two kinds of coal shows : 

E r (anthracite) =(83. 3X75. 6X64.1) + 10, 000 = 40. 367 per cent. 

E T (bituminous) = (62. 5X96.6X7 1. 2) + 10, 000 = 42.987 per cent. 

Now we can see that the use of the coal costing most per ton and 
per unit is in this particular case about 6 per cent more econom- 
ical than the use of the other coal which, judged by price per 
ton alone, appears to be 25 per cent cheaper. 



no 

If we further assume that we install a mechanical device for 
the better utilization of coal No. 1 (anthracite screenings) which 
will cut down the amount of unburned combustible in the ash 
to 38 per cent instead of our preceding 52.6 per cent ; the efficiency 
of our second step (efficiency of combustion) will thus be raised 
to about 86 per cent (instead of the former 75.6), and because of 
the better draft control, the efficiency of the third stage (heat 
utilization) will also rise and reach 70 per cent instead of 64.1. 
The total or resultant efficiency will then become 50.15 instead 
of 40.3 as before, and the anthracite screenings will prove about 
17 per cent more economical than bituminous. Our task is next 
to determine whether the gross saving after providing for 
interest on investment, depreciation, maintenance, and labor will 
leave a net saving sufficient to warrant the installation necessary 
to burn that grade of fuel. 

To determine these efficiencies, certain points which have not 
yet been discussed should be carefully noted. It is self-evident 
that in determining the cost of 1,000,000 B. t. u., the cost of 
additional freight, handling, removal of ashes, etc., must be 
taken into account and must be determined on the basis of the 
average percentage of ashes in the coal we are considering. In 
some cases, however, out of several lots of coal received under 
the same contract, certain deliveries may show a percentage of 
ash higher than the average and yet prove higher also in B. t. u. 
This fact is shown by the following analyses, made by the New 
York City Laboratory and checked by the Bureau of Mines : 

Anthracite Pea Case A Case B 

Moisture 2.6 3.8 

Ash 28.7 18.3 

Volatile matter 4.2 5.2 

Fixed carbon 64.5 72.7 

B. t. u. commercial 10,792 10,748 

B. t. u. pound dry 11,080 11,173 

It is the province of the analytical chemist to determine 
whether the loss of thermal value in case B is due to endothermic 
reactions caused by certain constitutents in the ash, or to some 
other cause. The example, however, is not an exceptional one 
and it serves to illustrate the small value of proximate analyses 
without a calorimetric test. On the other hand, the percentage of ash 
shown by analysis can not at all be taken as a safe guide in esti- 
mating the cost of handling, since the percentage of refuse is greater 



Ill 



than the percentage of ash as disclosed by analysis. In our compari- 
son of two coals costing $1.65 and $2.53 per ton respectively, the 
cost of handling refuse at 26 cents per ton occasions a surcharge 




Mar. 30->t Bituminous A nthracife 
Balance 
malm Hand Apr./f/$W 

Fig. 35. — Weekly Coal Report 

Graphic presentation of weekly deliveries and consumption of two grades of 
coal used at a mill power plant. Balances to hand at the beginning and at the end 
of the month, shown by vertical bars, indicating depletion of bituminous coal 
pile and accumulation of anthracite. 



of 9.88 cents and 2.6 cents respectively, although the percentage 
of ashes appears by analysis to be 7 and 18. The practice fol- 
lowed by some companies of basing their figuring on the per- 



112 



centage of ash shown by analysis instead of on the average of 
furnace refuse actually produced, is therefore misleading. The 
second point which should always be kept in mind is the wide 
range of actual heating pc, er apparently exhibited by the vola- 
tile matter, if we consider the heating value of fixed carbon as 
a constant and consider the ashes to be inert. A high percentage 
of volatile matter therefore does not necessarily mean an in- 
crease in the resultant heating value of a coal. The number of 
B. t. u. in one pound of volatile matter in coal, as shown by 
actual burning of the coal in a bomb calorimeter, appears to vary 
from 40,000 B. t. u. down to a negative value. It is apparent 
that the heating value of the volatile combustible, very high in 
the case of high percentages of H and CIL for instance, can not 
descend below zero even if the volatile matter were composed 
of absolutely incombustible gases as COa N, O and the like. 
Nevertheless, two samples of different coals repeatedly analyzed 
by different chemists give the following results : 

Kind of Coal No. 1 No. 2 

Size Run of mine Pea 

Moisture 1.5 3.9 

Ash 72 15.0 

Volatile matter 15.7 4.6 

Fixed carbon 75.6 76.5 

B. t. u. commercial 14,293 10,792 

B. t. u. dry 14,510 11,230 

In sample No. 1 the heating value of one pound of the fixed 
and volatile combustible free from ash and moisture would be 
14,293+ (0.756+0.157) =15,655 B. t. u. The percentage composi- 
tion of the combustible considered by itself is 17.2 per cent of 
volatile matter and 82.8 fixed carbon. As the heating value of 
carbon is 14,544 B. t. u. per pound, the 82.8 per cent of fixed 
carbon would account for 12039.73 B. t. u. Therefore, the 17.2 
per cent of volatile appears to be credited with 15,655 — 12,039.73 
B. t. u. =3615.27 B. t. u. This is equivalent to a thermal value 
of 21,019 B. t. u. per pound. 

In sample No. 2 the heating value of one pound of combust- 
ible free from ash and moisture would be 10,792+ (0.765+0.46) 
=13,307 B. t. u. The percentage composition of a pound of com- 
bustible in this coal taken by itself would be 5.67 per cent of 
volatile matter and 94.33 per cent of fixed carbon. Taking again 



H3 

the constant heating value of carbon at 14.544 B. t. u. per pound, 
the fixed carbon in this second sample alone would give 13,179 
B. t. u. which is 412 B. t. u. greater than the heating value of a 
pound of the combustible with the volatile matter included. In 
other words, our 5.56 of volatile matter appears to have a minus 
thermal value of 412 B. t. u. or a negative quantity of heat which 
has somehow disappeared in the combustion of the coal, either 
due to error in analysis or due to endothermic reaction. 

It is necessary to determine carefully to what degree of effi- 
ciency the respective kind and size of coal can be burned on 
the grates and under the condition with which the plant must 
operate. High percentages of combustible in the ashes are often 
due to unsuitability in the (fesign of the grate, the force of 
draft used, the size of coal fired, etc., and each individual case 
should therefore be examined separately. To determine in any 
particular instance whether it would be more economical to change 
the coal or to alter the furnace is a rather complicated problem, 
because the local factor, which is of great importance, must be 
carefully and minutely examined and its influence computed. 

Similar practice though in a somewhat different procedure 
should be followed in selection and purchases of other supplies, 
parts and articles needed. The value of lubricants, gaskets and 
any other article cannot be determined either as quickly or as 
easily as this of fuel for the reason that the period of its usable 
life is sometimes very long and it has an indirect effect on numer- 
ous other plant functions, such as the possibility of maintaining 
the best operating conditions as to vaccum, freedom of leaks, 
etc., on frequency of replacements involving extra labor and 
idleness of equipment; on costliness of repairs and maintenance; 
on safety of employees; on freedom from accidents, interrup- 
tions, etc. In order to intelligently determine the service advan- 
tages, it is futile to limit the considerations to the mere cost 
and life of an article or supply since it is necessary to account 
for all these indirect factors; though again the general criterion 
should be not the price per piece, pound or gallon, etc. ; but per unit 
of time and output or time alone if load has no determining 
effect. The method of determining relative values of materials 
in this group in general at least should, therefore, be based 
on (1) record of performance (see Figure 44), (2) on the close 
analysis of operating and maintenance cost, and (3) on records 
of interruptions and idleness (See Figures 28, 29 and 95). 



H4 

Managerial Functions 

Those directing the production of power, or of any other 
commodity, cannot ignore the responsibilities coupled with their 
authority. Waste in any form means the ruination of the indi- 
vidual enterprise, as well as the undermining of the prosperity 
of a community upon which the business depends and which it 
should serve. It is quite obvious that most of the losses occur- 
ring in operation are due to imperfect organization, lack of knowl- 
edge, with resulting poor methods, but it is equally evident that 
no improvement along these lines can be made until we learn 
how to master the materials we use. This function is decidedly 
managerial, inasmuch as workmen, firemen, engineers, etc., are 
expected to use the equipment, supplies and materials provided 
for them, and if they are unsuited to the purpose of attainment 
of predetermined results the entire blame rests upon those re- 
sponsible for such handicaps. The functions may be divided 
into two main groups, Care of Materials and Care of Equip- 
ment, both being closely and intimately correlated and depend- 
ing one on the other. 

The organization to care for materials embraces the follow- 
ing details : 

a Selecting 

b Purchasing 

c Testing 

d Storing. 

Similarly the care of equipment embraces : 

a Scheduling maintenance 

b Specifying work 

c Providing labor and material 

d Instructions 

e Compensation 

Care of Material 

All materials used in connection with power production are 
controlled by the plant office, storekeeper being the custodian of 
materials from the time of receipt of the article purchased until 
these articles are issued for use. To facilitate identification of stores 
for charges, etc., all stores are classified into five groups : 

Raw material as the name indicates, is the material which is 
converted into product thus losing its identity ; for instance, fuel. 



n5 

Supplies are standardized materials used in the plant, being 
neither converted into product nor forming part of the equip- 
ment, such as lubricants, stationery, cleaning materials, tools 
and implements, etc. 

Maintenance stores include all such articles as are used for 
maintaining the plant and equipment in perfect operating condi- 
tion; these include spare parts, gaskets, transformer oil, boiler 
compound, motor brushes, etc. 

Second-hand stores. All returned parts of the equipment not 
needed temporarily are returned to the store, repaired and issued 
subsequently in preference to similar, new articles. 

Scrap and refuse. All material that has lost its usefulness 
for the plant is turned over to^the store to be sold or otherwise 
disposed of, as for instance, old boiler tubes, brass parts, old 
grates, ashes, burned out electric lamps, etc. 

When the plant office establishes as standard a specifica- 
tion for material, the purchasing agent is notified and no other 
article should be substituted unless such course is unavoidable 
and the plant office is notified in advance so that necessary 
measures can be taken to minimize the ill effect of the use of 
that which is less suitable. Such material as needs constant 
testing is sampled and submitted to the laboratory for test and 
report prior to the use of the new delivery. Besides coal, such a 
procedure may be found necessary for fire brick, transformer oil, 
new unclassified purchases, etc. 

The storekeeper is the custodian of all material in the plant. 
As every article represents money paid for it, the same care 
must be exercised over it as for cash in a safe or a bank. Re- 
ceipt, storing and issuing are carefully recorded and the following 
seven rules rigidly observed: 

1 Check every delivery as to quantity and standard of 

quality 

2 Have only the prescribed quantity of each article on 

hand 

3 Order new purchase only when amount left in store is 

equal to that designated as "order point" i. e., just enough 
to last until a new supply reaches the stores 

4 Issue from old stock until exhausted. Never mix new 

and old lots 

5 Issue only on presentation of store issue slip properly in- 

dorsed 



n6 

6 Orders, issues and permanent balances of stores shall 

be handled through the plant office 

7 Take care to protect stores against deterioration. 

Small quantities of constantly needed stores may be kept in 
a sub-store and handled by the watch engineer as the store- 
keeper's representative in his absence. He should be responsible 
for the lot issued to him on a special store issue card. 

As the most important item of material used in a power 
plant is coal, special problems are presented in its care. The 
quantity of coal to be stored is a complicated question depend- 
ing on numerous local conditions which cannot be discussed 
here at length. Plant operation free from interruption is a chief 
factor; deterioration and possibility of spontaneous combustion 
should also be taken into account. Interest on the coal pile 
seldom receives due attention. All deliveries being unequal in 
quality and character, it is undesirable to mix various coals, 
and should carefully be avoided. The chart shown in Figure 
35 is very serviceable as a means of reference and control, since 
it shows at a glance the quantity on hand on any day or week, 
quantity of each delivery, daily consumption and quantities of 
each grade or kind of coal on hand and other useful information. 
(For further information see Chapter IX.) 

Necessity of Planning for Handling of Material 

The next function of management is care, handling and moving 
materials. It is obvious that to execute any work requiring use 
of material we must know: 

1 What material is needed 

2 Where it is needed 

3 When it is needed 

4 What is to be done with it. 

Very often when certain work is to be done in a plant, merely 
a general order is given as to what is wanted. The man is left 
to find out for himself at what time the machine will be avail- 
able to do the repair. When he starts work, he discovers that 
he needs certain materials; next he hunts for these and when 
he gets them, takes plenty in order to avoid shortage while 
working; then when he is through, the left overs are stuck 
away somewhere in a cupboard. The good excuse is "to have 



ii7 

it handy next time," but as it regularly happens that "next time" 
he can't find it even if he remembers where he put them, the 
story merely repeats itself; waste of time to find out what is 
needed, waste of more time to go and fetch it, waste of excess 
material. Yet no mechanic could be blamed for it as his job is to 
do the work, not to manage the power plant. 

We detail duties of such nature to the engineering or pro- 
duction office. The experience of the plant engineer aided by 
standards and records helps him to avoid mistakes and save 
the time of the mechanic and on the cost of the job. While 
the function of maintenance engineer will be explained in Chap- 
ter V, we should remember in this connection that the care of 

. . . i . 

issuing, moving and using Materials is one of the principal 

functions of management and it should be well organized before 
a full success may be expected from the work of maintenance crew. 



Chapter V 

MASTERING MAINTENANCE 

IN the preceding chapters we have shown the relations in which 
the economy of production stands to equipment installed and 
materials used. The consideration however was from the viewpoint 
of potentiality embodied in a given equipment or material; the 
mode of its use was not discussed. It is obvious that perfect equip- 
ment as the most suitable material may be misused, abused or put 
to wrong purpose with an inevitable result that its inherent, potential 
advantages are not fully realized. Under such mistreatment of 
physical elements of a plant the difference between good and poor 
mechanism or supply may entirely vanish if the former is poorly 
used and the latter is taken the best advantage of ; indeed, it may 
often be shown in practice that in the latter cases, the efficiency and 
economy are higher, both relatively and absolutely. One of the fre- 
quent causes is purely psychological in its nature — management and 
other employees, realizing the handicaps they are put on, exercise 
better judgment and care in securing creditable results from poor 
plant than the organization which is complacently proud with ad- 
mittedly up-to-date means of production at their disposal. Such is 
not an infrequent case in large central stations, largely depending on 
the engineering specifications and investments in up-to-date equip- 
ment for securing results that seem certain, and losing sight of im- 
portance of methods of operation and maintenance. 

We must therefore pass to a considerations of that function of 
plant management which aims to maintain the equipment and plant 
in a condition fit for the most economical and efficient production. 
Proper upkeep of power equipment is of far greater influence on 
output and economy than it is in many other manufacturing enter- 
prises. Neglect to clean the heating surface of boilers, to prevent 
numerous little leaks, etc., seriously affects the fuel economy. Care- 
less, sporadic inspection of equipment is much more hazardous in 
power plants than anywhere else, as it may result not only in crip- 
pling one section of a plant, or cause poor service, or even temporary 
shutdown, but is liable to cause more serious disaster. The old 

118 



ii9 

saying that "a stitch in time saves nine" is nowhere more true 
than in the power plant. 

To secure the possbility of obtaining uniformly good results from 
proper methods of operation — that is, make it possible for the men 
to live up to their tasks and, if the bonus award is offered, to earn 
it, the plant equipment must be maintained at all times in a uni- 
formly good operating condition. 

Distinction Between Upkeep and Repair 

The well-known fact that the efficiency of equipment depreciates 
in time is primarily due to poorly/ planned or unsatisfactorily car- 
ried out maintenance work. As^i rule it is not so much the result 
of natural wear and tear of machinery as it is the consequence of 
accumulation of residue of processes that diminish the efficiency of 
the elements of equipment thus affected. The wear and tear in a 
large degree is the consequence of this first cause and generally 
speaking is not nearly as difficult to handle, for it is a great deal 
more apparent even to a casual or superficial inspection. 

The ill effects of deposits from feedwater in the form of scale 
or grease on the surface of heaters and boilers, or from fuel on 
heating surface of boilers and economisers as soot and cinders can- 
not be correctly appreciated and measured unless a record of instru- 
ment readings is closely studied and scrutinized. In the plants 
having no such instruments the effect of dirty heating surfaces can 
not be measured or at least correctly allocated as the drop of effi- 
ciency may be ascribed to other causes, one guess being as good as 
another. The inevitable result is that cleaning, soot blowing, wash- 
outs, etc., are made at intervals set at random, chiefly determined 
by the looks at the time of the last cleaning. If, as it often happens, 
the nature of fuel was changed or more or less load was carried 
during the period, or draft was adjusted differently or the content 
and nature of scale- forming matters in the water has in interim under- 
gone a change, — the best prognostications as to reasonable length 
of time between cleanings are of very questionable value. Similarly, 
the deterioration of oil in circulating system, in transformers, etc., 
is not readily noticeable unless suitable tests are made periodically. 
To the contrary any break-down, loose working, leak or other dam- 
age to the parts of equipment proper is immediately apparent and 
therefore has more chance to be promptly attended to. 

The cardinal difference between the aims of upkeep and repair 
is that upkeep of the plant, as the name implies, tends to keep up 



120 

the efficiency of equipment and plant in its original state, while the 
repair mends or replaces the disabled, worn-out or broken parts. 
The repair is thus concerned with maintaining the original form of 
plant and equipment, while the upkeep aims at preservation of its 
original efficiency. Both functions are inseparable in such instances 
where the wear and tear of equipment impairs the efficiency of oper- 
ation, as may be in case grates burnt out or babbitt melted from over- 
heated bearing, yet it may be entirely independent, as for example in 
case of repacking a gland or blowing off the soot or changing oil 
or cleaning out the filter — these being purely and simply upkeep 
jobs; any repair job (unless it is done on an utterly useless part) 
contributes to the proper operation and maintains general efficiency 
of the plant though it might be a trifle like a broken window pane, 
or a chipped spot on the floor. 

Both repair and upkeep thus constitute two phases of one impor- 
tant function of mastering production, namely maintenance and any 
sub-classificatoin of jobs as are frequently met in practice are merely 
formal, bookkeeper's classifications to denote either that the work 
was attended by operating force or by repair crew and sometimes to 
distinguish to what expense account the charges are to be made; 
practical value of such differentiations is limited to specific cases 
only, the expenses of both groups contributing to the possibility of 
operating the plant with minimum waste. 

One technical detail may however be pointed out in passing, 
regarding the broad principle of classification of expenses on sup- 
plies and materials used in maintenance. Articles, such as boiler 
compound, lubricating materials, etc., that are used continually in 
order to maintain the efficiency of operating processes at the best 
point, are obviously consumed in proportion to production and may 
be charged directly to operating expense account as materials directly 
used in the process of converting the forms of energy handled. On 
the other hand such articles as used in maintaining the plant in its 
best operating conditions but form an integral part of equipment or 
plant after they are put to use, for instance paints, oil in switches 
and transformers, gaskets and the like should be charged to the 
maintenance account. Such a distinction, as we shall see later, is 
of material help in an intelligent analysis of cost reports and should 
therefore not be neglected. 

Depreciation of Efficiency 

While wear and tear on machinery (obsolescence belongs to an 
entirely different plane) depreciate their value, the efficiency of the 



121 



machinery is likewise gradually depreciated. Similarity of the proc- 
ess may be grasped if we will consider as an example the service life 
of a simple unit, say a pump. A new pump in perfect condition 
is capable of delivering a certain number of gallons against a given 
pressure (foot-pounds) for a definite input of a certain volume of 
steam at given temperature and pressure (foot-pounds per B. t. u.). 
As the valves and plungers on one side, piston rings and valves and 
link motion on the other wear out, the pump is losing its value in 
some relation to the work done and, as this may be assumed a func- 



8.8 



Deterioration of Efficiency 
( Actual Record of A Central Stat ion of an : 
Electric Rai/roacfwith Average Monthly 

t about 4 000, 000 to 5,000, OOOKw-hr. ) 




J«- 1915 



I2>16 yfcr 1917 



4.5 



4= 
o 

4.0 J 



u, 

«>* 

o 

35 S 



*i> 

C 

3.0 £ 



Fig. 36. — Depreciation of Plant Efficiency Due to Poor Maintenance 

For over three years the policy of this central station was to "economize" on 
maintenance. This caused increase of B.t.u. consumption per Kw.h. by about 
5,000 B.t.u. or extra expenditure of 10,000 tons per year. Finally this company 
has entered into an arrangement for purchase of power from outside. The entire 
plant was thus rendered useless and fare increased. 



tion of time, the pump will be worn out and unfit for use at the 
end of a certain period. At that time its value will be depreciated 
to that of the material from which the pump was made (scrap value), 
the difference between the first cost and the salvage price being trans- 
ferred into the value of water pumped during this period. At the 
same time the efficiency of the pump is similarly decreased, as slip- 
page, leaks, etc., increase steam consumption until finally no amount 
of B. t. u. input will cause any quantity of water to be pumped 
against even slightest pressure or elevation. At this point the pump, 
as a pump, ceases to exist and becomes merely a burdensome occupant 
of space. 



122 



In practice, however, the unit is not allowed to wear itself out in 
this manner but from time to time is put under repair, leakages 
stopped, etc. This maintenance work obviously produces three dis- 
tinct results : extends the life of the unit, invigorates its dropping 
efficiency, and involves additional expense. Were it possible to 
infinitely maintain our unit in its prime of working condition, the 
depreciation charge would practically cease to exist and we will have 
only interest on original investment and cost of maintenance (rent 
of space, etc., being disregarded for simplicity). Now, as a matter 
of fact, a material of which the pump is made wears out and the 
expenses of maintenance and replacement of weakened and worn- 
out parts finally exceed the amount of money outlay necessary for 
a new unit, that is, the cumulative annual maintenance expense plus 
the unrecoverable loss of efficiency becomes larger than the annual 
depreciation of a new unit plus or minus the difference in the interest 
charge. Within the entire period of the life of our equipment there 
are thus periods between repairs when the efficiency is gradually 
deteriorated (i. e., number of B. t. u. per foot-pound of work in- 
creases) and then measures are taken to restore, as nearly as possible, 
the original efficiency. If we were to carry the repairs so thoroughly 
that after every repair we would be able to secure the same degree 
of efficiency as that for which the unit was designed then, we would 
merely be confronted with accumulation of losses between the re- 
pairs, but as it would mean complete rebuilding of the unit in the 
course of time (which as we have seen, may become prohibitive in 
price, or undesirable from the viewpoint of advance in the art), the 
usual course is to restore the inherent efficiency only in a measure. 
The losses due to the deterioration of efficiency do therefore accumu- 
late more rapidly as the age of the unit advances. 

Whenever a sinking fund is provided for amortization, the object 
of which is to take care of the eventual replacement of old equip- 
ment and, as the use and attending it wear and tear are necessary 
for production, such expenses and outlays are legitimate and neces- 
sary parts of the cost of product. The condition is somewhat dif- 
ferent however in case of depreciation of efficiency. If the efficiency 
of worn-out or clogged equipment drops, as it invariably does, the 
fuel consumption per unit of output increases ; sometimes the produc- 
tive capacity of equipment is also diminished, but in both cases the 
production expenses increase through larger fuel bill and reduced 
productivity per dollar invested and rent. The effect of such rise 
of production expenses is either reduction of profit, if price of 
product can not be advanced, or inflation of price of product. But 



123 

whether the owner or the public has to stand the consequence, the 
fact is that the operation is getting more inefficient and waste and 
cost are increased without any value being added to the product. 
To establish a fund parallel to the sinking fund to take care of or 
amortize this increased cost of inefficient operation thus making the 
ultimate consumer of the product contribute to that "inefficient 
fund" would appear unjust and impractical, yet this is exactly what 
is being done to-day under another name. Any charge or price 
fixing that is based on the cost of operating the equipment in the 



700 



"i — m i i i rn i i r 

Increase of Temperature of Escaping Flue-gases wth Heating Surface 
Cleaned Once a Week(') Compared witfi Cleaning Twice a Dag(x) 
N0TE : SJiaded Area Correspondsfo Saving due to Upkeep. 



8 500 



0) 



400 




Deterioration of Efficiencu of Heatinq Surface 

i i i i [ r i j_J i 



Fig. 37. — Deterioration of Effiency 

The conductivity of heating surface decreases rapidly with an accumulation of 
soot and scale. The losses accumulate rapidly during the week when the cleaning 
is made every seven days, whereas when cleaning is made daily, at the end of two 
weeks period, the losses are considerably reduced. Similar effect is observed when 
the boilers are turbined and washed out instead of preventing formation of scale. 

average condition of repair and not at its best operating economy is 
a form of taxatoin to cover the loss caused by imperfect maintenance. 
To illustrate this fact graphically, Figure 36 has been prepared. 
For several years the efficiency of a large central station was grad- 
ually dropping, due to unwise economy in maintenance expense, until 
finally it was consuming 35,000 more tons of coal than it should. 
Obviously, the operating losses caused by depreciated efficiency may 
be materially lessened by shortening the periods between cleaning 
and overhauling of various units of equipment. Figure 37 repre- 
sents graphically the general truth of this statement, the limiting 
factor being the cost of maintenance work as opposed to correspond- 
ing increase of operating expenses for the longer or shorter periods. 
Another, and a more general consideration of course, is the safety 
of operation with infrequent overhaulings. In any event, as has 



124 

been stated before and as shown in Figure 37 an allowance should 
be made for the unrecoverable loss of efficiency (dash curve) for 
at least a fairly long interval, such as, gradual increase of water rate 
in turbines as the blading is slowly getting worn out, or even in less 
prolonged intervals as for instance in the case of blowing off soot 
from heating surface. While in this case, the frequency of operat- 
ing the blowers is determined by the cost of their operation (use 
of steam, wear, loss of fuel during blowing period) as compared 
with gains due to better heat convection, the entire accumulation of 
soot is not totally removed by the action of blowers and thus after 
each consecutive blowing the former efficiency is not fully re-estab- 
lished and eventual scraping is to be resorted to at the end of a longer 
period. 

Such inevitable loss of efficiency even under the best care and 
maintenance is not to be confused with altogether preventable losses 
due to neglected upkeep : being borne out of the physical nature of 
the processes or machinery they are unavoidable operating expenses, 
at least after a thorough study and experimentation establishes be- 
yond question that the manner in which the maintenance is taken 
care of is all that it should be. An example of depreciation of effi- 
ceincy due to this cause of slow wear and tear may be seen in 
Figure 25 representing the efficiency of a 2500 kilowatt turbine at 
the time of its installation and a few years after, both tests being 
figured on the basis of the same steam pressure and superheat. 

Inasmuch as the average loss of efficiency throughout this period 
is equivalent to an increase of steam consumption of 1 pound per 
kilowatt, we may readily figure out the depreciation of its use value. 
During this period the turbine has generated 40,000,000 kilowatt 
hours and therefore on the basis of the above average, it used the 
same number of pounds of steam costing 25 cents (coal value only), 
the total loss is equal to $10,000. If during the last year in question 
this turbine caused say $4000 annual loss it means the same as if 
any other form of capital failed to earn the same amount of income. 
An average financier will readily appreciate the meaning of non- 
revenue producing investment; now, carrying this simile further in 
a deteriorated equipment we have an investment of capital, yet for 
the privilege of investing it an annual charge is made against the 
capitalist, and the amount of this charge is increasing with every 
year. Another side of the situation is the social significance of the 
losses caused by deterioration of efficiency of equipment the main- 
tenance of which was neglected (the nature of this loss was exposed 
in the chapter on mastering materials) and as in the case of misused 



125 



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126 

materials it represents not only an irretrievable dissipation of labor, 
but is at the same time one of the processes of accumulation of 
capital as the community is paying the expenses of all losses of pro- 
duction plus an accepted interest thereon. 

Planning Maintenance Work 

The maintenance work appears, in the light of the above consid- 
erations, as something more than mere mechanics' work. The main- 
tenance of plant in the best possible operating condition assumes the 
importance of a fundamental function of management. Its influence 
is extended in three directions : ( 1 ) conservation of natural resources 
and labor power, (2) satisfaction of fundamental prerequisites of 
economic prosperity of the country which is able to produce more 
and cheaper goods with correspondingly higher wages, and (3) im- 
provement of working conditions for the men engaged in a well- 
kept, properly maintained establishment. 

The management thus faces the responsibility, not only of safely 
keeping the physical properly, but also it must see to it that the 
plant does not become a source of loss of materials and labor; that 
it does not cause higher cost of production than it might be in a 
well kept plant; that the productive equipment is not rendered idle 
because of neglected or ill timed repair; and above all that the 
physical conditions are not permitted to cause unnecessary fatigue, 
degradation or depression on the employees not to say that it never 
should become a source of a danger to their life, limb or any mental 
or physical faculty. 

Mastering the maintenance so as to satisfy these elementary re- 
quirements of economy, production, decency, and safety should be 
planned so that the following requisites are always satisfied: 

a Highest all-around efficiency obtainable 

b Maximum capacity available 

c Minimum idle expense involved 

d Steady employment provided 

e Danger and discomfort eliminated. 

From a study of the characteristics of the equipment used in 
the plant and from the log of daily performance, two things may 
be definitely established: the maximum efficiency under best condi- 
tion for which any given piece of apparatus is capable and its daily 
actual performance. Close scrutinizing of these two may disclose 
that in every day practice the efficiency obtained is lower than that 



127 

possible. This may be due to one of the three main causes: (1) 
faulty method of use or operation, (2) unavoidable handicaps and 
(3) run-down physical conditions. In this latter case, cleaning, over- 
hauling, or repair should be undertaken. In practice, however, it 
is sometimes extremely difficult to draw a distinct responsibility 



ELECTRICAL INSPECTION ROUTE CARD 
MAKE THE FOLLOWING INSPECTIONS IN THE ORDER NAMED 

JAN. / TO JULY I, 19/6. 


WATCH 7-3 EVEN SUNDAVS 


APPARATUS 


CM 


5§ 




K) 


CM 


S* 


CM 


cy> 


CM 


N 


£ 


^ 


63 




/ - 2S Cy. Gens. 


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3 - No. 13 


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SIGNED 


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Fig. 39. — Inspection Route Card 
Stitch in time saves nine. Inspectors make routes and attend to minor ad- 
justment at once themselves, if O.K. they mark on the card >/; if repair needed 
R, and if it is dangerous to keep the mechanism in use they order it out — 0. These 
cards are protected from soiling by a celluloid envelope with a slot cut in to write 
marks. 



128 

but comparatively simple to establish definite periods for regular 
cleaning and overhauling of any and all parts of whole units of 
equipment. This is done on the basis of observation modified by 
(1) cost of cleaning or overhauling as compared with the gain re- 
sulting and (2) opportunities to withdraw equipment from opera- 
tion. 

Unquestionably the most convenient way to lay out and follow 
up the plan for this work is the graphic schedule of maintenance 
work (see Figure 38) and as a means of protection against troubles 
and possible interruption of production, frequent and regulated 
inspection should be made in accordance with a well laid out route 
and notes of findings to be made on the route card (see Figure 39). 

Following up this plan it is possible to always maintain a maxi- 
mum capacity of equipment available for production. Two factors 
contribute to that end. First, inasmuch as certain machinery loses 
its productive capacity if run for a length of time without due atten- 
tion, frequent cleaning and overhauling makes it possible to secure 
the same result from a smaller number of machines in line. Second, 
when the maintenance work is being done on schedule, equipment 
is frequently inspected and its capacity and efficiency may be relied 
upon, a greater output may safely be secured, not only on the 
average but during the peaks. This condition considerably relieves 
the common anxiety as to security of operation in one extreme and 
as to expense of keeping excessive spare idle equipment in another. 
It hardly need to be mentioned in this connection, that these results 
can be secured in an average plant only after thorough overhauling 
of the entire equipment and gradual putting every unit overhauled 
on schedule. This takes considerable time, varying not only with 
the size of the plant and the condition in which equipment was orig- 
inally found, but depends also upon the nature of the service, spare 
capacity, available help and facilities, etc. 

It inevitably follows that whenever the work is done in accord- 
ance with a prearranged plan, whenever a unit is taken out of service 
for maintenance work, the men and materials ready, and instruc- 
tions and other facilities available, the work may be prosecuted much 
more rapidly than in cases when the unit is to undergo overhauling 
or repair at an unexpected moment, when need of the work to be 
done were not anticipated, facilities, materials, drawings, etc., not 
provided and the best fitted men not available. It is to be remem- 
bered that the less time spent for maintenance work rendering equip- 
ment idle or non-productive, the less is the overhead charge on the 
product, and as we have shown elsewhere this item in a modern plant 



129 



is a very considerable portion of the expense. Furthermore, in cases 
where ample spare capacity is idle anyway because of lack of load, 
the speedy completion of maintenance work means not only lower 



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expense on labor but a greater safety against unforeseen accident 
that may render some other unit inoperative, thus sometimes render- 
ing idle and unavailable a portion of the plant equal or even larger 
than the rest of the plant capacity. 



130 

Another outstanding advantage resulting from a well preplanned 
maintenance work is that scheduling of jobs does away with sporadic 
rush work followed by periods of laxity of work of this kind. Under 
such conditions there is difficulty at times in obtaining competent 
men to make the repairs, temporary help either skilled or unskilled 
who, frequently unfamiliar with plant details must thus be hired 
and they usually require a great deal of attention and help from the 
regular operating force. It is necessary of course to lay off these 
men when the work is completed and no other is in sight. Sched- 
uled maintenance, as opposed to such state of uncertainty, makes it 
possible to provide steady employment for a first class competent 
maintenance man or maintenance crew, as the case may be. Mainte- 
nance work being carefully scheduled and planned is carried out 
continuously ; therefore a double advantage is secured : first a smaller 
force is needed as accumulation of rush work is eliminated, and 
second, this man or men can count on steady employment and con- 
sequently better men will be available for the position. Furthermore, 
familiarity with plant layout, conditions and service requirements 
on the part of maintenance men are essential, but what is still more 
important is the fact that a permanent crew does the work not in 
a superficial or careless manner as is often the case with temporary 
men. Moreover, the job is not unnecessarily dragged and delayed 
as is frequently the case when done by a man temporarily employed 
who may not see any other employment waiting for him. These 
advantages of the planned work and permanent maintenance crew 
are of great importance to both employers and employees and, inci- 
dentally breed another valuable by-effect: maintenance men, being 
thoroughly familiar with the plant, do not interfere in any way with 
the operating crew either by constantly asking questions or requiring 
directions and help. 

Finally, under such regime, a great deal of danger and discomfort 
is eliminated. The majority of power plant accidents both to men 
and equipment occur during repair work and are ordinarily trace- 
able either to insufficient familiarity with peculiarities of plant or 
to rush and overtime work while sometimes it is due to the fact that 
the operators busy themselves with maintenance work and overlook 
their own direct functions. Any one familiar with the inner life of 
a plant knows with what relief the end of any repair work is usually 
greeted; yet there is no cause for anxiety or discomfort in a plant 
where all maintenance work is carried out by a well-trained per- 
manent force, intelligently cooperating with operating men both 
during the work and in the aim of the work — to maintain the 



i3i 



equipment in the best possible operating condition and not merely 
perfunctorily comply with order for repair. 



Mechanism for Maintenance Work 

An automobilist who buys a new car every season and gets rid 
of the last year model keeps his repair bill low at the expense of 
enormous depreciation within a short time. Whatever it cost him 

no 



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10 20 3Q 40 50 60 70 80 90 100 
ACTUAL PRESSURE 

Fig. 41. — Graphic Record of Testing the Instruments 

This method of recording the check tests of accuracy is very convenient for 
electric meters or any other power plant instruments, the correct readings and 
readings as observed platted on coordinates to the same scale. If instrument is 
correct the record will fall on diagonal line. If there is minus error readings will 
be below the diagonal and if there is plus error the readings will be above the 
diagonal. 

he has at least a satisfaction of using new, efficient mechanism. When 
this gentleman owns a power plant, however, he cannot afford to 
sell the entire equipment to a second-hand dealer every year and 
replace it with new machinery and so he keeps what he has as long 



132 

as he can, but his dislike for repairs and underestimation of the value 
of regulated maintenance is ordinarily so great that the cheapest men 
are relied upon to take care of this inevitable evil — maintenance. The 
results, in the predominating majority of the plants, are very deplor- 
able and the consumers of its product and thus the country at large 
pays for the consequences. 

Yet, even the best mechanics can do little for maintaining the 
plant's equipment in a constantly efficient operating state unless they 
are given the opportunity to do good work. Skill alone, without 
proper planning and administrative mechanism is always at a great 
disadvantage. Therefore, the organization of maintenance work 
and the working mechanism that permits and insures proper care of 
equipment are essential. 

The first problem that comes under consideration is the time when 
any maintenance job is to be done. This presupposes the knowledge 
of the time when the machine will be avaliable for repair as well 
as the time when the machine shall be again available for operation. 
Thus we must know duration of available time and from it judge 
whether time needed for repair contemplated is smaller than this 
available. Usually the time taken for the work is much longer than 
it should be, because needed men are not available in the beginning 
and when they are assigned, they find themselves unprovided with 
either necessary materials or tools or both. With work scheduled 
well ahead of time all the needs and handicaps may easily be fore- 
seen and provided. Hence, graphic schedule of maintenance work 
is the most needed and highly useful mechanism the management 
must devise. As a rule in the beginning, the work on a schedule dis- 
closes many things that are believed to be well known but are not. 
Nobody is certain as to how much time the job will take, what tools 
will come in handy, what is the best material to use, etc. Planning 
therefore by necessity is started on the basis of the best guess and, 
as experience and observations accumulate, the uncertainties are 
eliminated and errors of guess corrected. Thus in our maintenance 
schedule (see Figure 38) we must show not only when the task 
should start and end but when it actually was started, how long 
it took to finish the job and when it was actually completed. Red 
lines opposite each unit of equipment on the schedule show on the 
time scale the extent of time allowed while the black lines above 
represent the time of actual performance. 

The usefulness of such graphic schedules supplemented with per- 
formance records are manifold: (1) analysis of records helps to 
establish more accurately the time needed for work, (2) gradually 



133 



, , .i, rial ii mi i i 



REC'D 
FINISHED 

OPERATOR 



PARTS SPOKEN 
OR WORN 



CAUSE OF BREAK. 



MACHINE 
SYMBOL 




CHARGE 
SYMBOL 




REPAIR ORDER NO. 


PARTLY— TOTALLY DISABLED 


MONTH 


PAY 


YEAR 


A.M. 










P.M. 



WORK IN MACHINE AT TIME 



.PLEASE MAKE ABOVE REPAIRS BY 



MACHINE AVAILABLE FOR REPAIRS ON 



JCHIS ORDER MUST BE SENT TO REPAIR .OFFICE ■! !— ■ 

10M Sets-3-19 B136 . R E P A I R O R DER 





OPER. 
NO. 


OPERATION 


CLASS OF 
WORK 


'WORKMAN 


RATE 


1 




























































































10 










WAGES 


EXPENSE 


MATERIAL 


EXPENSE 


TOTAL CHARGES 






















*** 

TO BE KEPT BY REPAIR OFFICE 



Figs. 42 and 43. — Work order Form and its Reverse Side 
This form prepared in triplicate gives full record of work. Party ordering 
repair keeps one copy for follow up. Order is sent to repair shop in duplicate; 
original is kept on despatch board and copy given to workman doing the repair. 
On reverse side entries are made showing what was done, by whom and how much 
it cost. When work is completed the summary is entered on repair record card 
for each unit of equipment. 



134 

diminishing time taken shows that the periods between overhaulings, 
etc., may be lengthened, (3) with conditions of maintenance improv- 
ing, the schedule may be laid out more definitely, (4) tool-room 
and store room may regulate the amount of special tools and 
supplies which they must have on hand to meet regulated conditions 
and correctly anticipate the demands, (5) inspector or chief en- 
gineer may save a great deal of time by following up the preplanned 
work, (6) appropriations for maintenance work may be made more 
accurately. 

A similar method of charting the performance as it should pro- 
gress and as it has actually lived up to the schedule is readily applied 
to any new or construction work with even more gratifying results. 
While charts like Figure 38 were used by the author for many years 
they were more recently adopted by various governmental agencies 
in order to assist and control such activities as building new power 
plants or construction of boilers, boats, etc. (see Figure 40). 

The second element of this mechanism for planning the main- 
tenance work is regular inspections of every portion of the plant 
equipment in order to detect any possible weakness or unsatisfactory 
working condition developed between the periods of scheduled over- 
haulings, cleanings and repairs. Figure 39 illustrates a form that 
helps in carrying out the inspection in time and in sequence. 

The follow-up under such a regime is at once simple and safe; 
it eliminates guess and minimizes the break-downs or other causes 
of interruption. The engineer or plant clerk following up the graphic 
schedule and inspector's reports prepares work orders (see Figures 
42 and 43) and sees that men, materials, and tools are on hand at 
the time the machine can be made available for repair or any other 
work to be done on it. 

While the work is progressing, the data covering same are ac- 
cumulated on the back of the work order, and upon the completion 
of a job it is then known how long it took and how much labor and 
material was spent. From these we know the cost of repair and the 
record of same is kept for each individual unit (see Figures 44 and 
45). The data from these cards if completely and accurately filled 
out are of immeasurable value in determining what materials pro- 
duce the best results, last longest and shows the lowest cost in 
service, what method of repair gives better satisfaction and takes 
minimum time, etc. Moreover, comparison of maintenance records 
of machines of different make but in the same service gives a basis 
for preference for future orders of replacement; similarly careful 
perusal of these records often discloses that certain parts of other- 



135 

wise satisfactory machine give constant trouble, in which case, re- 
design or even a minor change is capable of producing a very material 
improvement. In many instances this method led to the discontinua- 
tion to purchase cheap supplies and materials proving themselves 
short lived and thus wasteful ; again it has been proven in some cases 
that much cheaper material gives excellent satisfaction; thus prov- 
ing that no generalities nor fixed policy of purchasing department 
should be seriously considered. The cost of maintenance in all cases, 
under such practice goes down after a year or so of experience is 
accumulated, which frequently causes no small surprise on the part 



/0*r^c*s SJf #t /B> 



File No.Qc/y^W [Dr'Wg. No .//S>/\ Alter ////,//?/</-] Wei 
REMARKS 



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Fig. 44. — Maintenance Record Card 

Individual cards are kept for each piece of equipment. Front side of the card 
contains data of identification, sometimes sketch and references to drawings, 
catalogs, alterations made, etc. Reverse side is shown in Fig. 45. 

of the operating engineers formerly believing that their past exper- 
ience (without minute record) warranted them in making certain 
conclusions and express preferences in matters of purchase of sup- 
plies and materials. As regards the modification of design in com- 
pliance with the repair records, the author recalls a case of a large 
railway central station having excessive repairs on a condenser due 
to poor water and electrolysis. An emergency repair was made by 
using concrete to mend the casting eaten away; the results were 
excellent and the concrete division wall stood several years of 
service. A recommendation was also made to the builders to change 
their design by using replaceable partitions in case they are worn 



136 

out instead of replacing the entire cast-iron base of the condenser. 
Economically the results were highly gratifying. 

Emphasis was laid in the last chapter on the importance of care- 
ful selection of materials and fitting of equipment for the service; 
far greater importance must be attached however to the men whose 
work consist in keeping the plant in a condition that permits the 
actual full utilization of the plants ultimate or inherent efficiency. 
A successful mastering of material side of a power plant calls for 
more than first-class mechanics engaged in its upkeep — it presup- 
poses a clear comprehension by the management of its uppermost 
duty: To base orders on facts. 

Cooperation Between Operating and Maintenance Forces 

In carrying out the maintenance work to its successful end one 
fact becomes clear — there is a very close relation between operating 
functions and care of maintenance. It may be said without exag- 
geration that the success of the entire enterprise largely depends on 
the spirit of cooperation which the maintenance force shows toward 
the operating departments. Good maintenance, as we have shown, 
is not only repairing of breakdowns nor even merely preventing loss 
of efficiency and interruptions in operation, though both are parts 
of the task, the aim of maintenance is to care for the physical condi- 
tions within the plan thus permitting the operation to be carried 
on with minimum exertion on the part of the men and maximum 
efficiency on the part of the machines. That it spells economy needs 
but little proof. In a small glassine-paper mill poor physical condi- 
tion of the power plant caused not only an extra $16,000 to be need- 
lessly expended on fuel and $10,000 on repair of equipment, but 
it caused loss of production amounting to $70,000 for 30 days during 
one year. Such examples may be multiplied endlessly but the point 
is that no plant is too small to introduce and carry a complete pro- 
gram of maintenance work. 

Erred: of poor maintenance on thermal efficiency of the plant is 
well known and has been previously discussed. It must be pointed 
out now in this connection that purely physical deterioration 
of efficiency of equipment is only one factor in the total drop 
of economy in a poorly maintained plant. The psychologic influence 
of neglected upkeep, uncomfortable surrounding, inconvenient or 
even unsafe working conditions, etc., are unquestionably of no lesser 
importance. No man likes to work in dirty, noisy, unsightly sur- 
roundings. Even pigs do not like dirt and are more successfully 



REPAIR RECORD 



Date 
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Fig. 45. — Maintenance Record Card — Reverse Side 
Record of repairs made are entered from data collected on form Fig. 43. It 
represents the history of individual piece of equipment. 



i3« 

bred in sanitary conditions, yet many plant owners shrink before 
the responsibility of maintaining their plants in condition that would 
bring out in their attendants the feeling of pride and interest. The 
efficiency of our Navy is in a large degree traceable to the cleanli- 
ness and first-class maintenance of equipment and surrounding; if 
maintenance were neglected, the Navy would soon break down. 
Similar losses to production and general welfare of industries and 
communities are not widely known and fully appreciated but, when- 
ever data are available, they leave no doubt that every dollar spent 
for perfect maintenance saves a twenty dollar loss. Again, the much 
talked of loss due to excessive turn-over of the employees in many 
cases is caused by poor maintenance of plants making work repulsive 
to the best men, while perhaps only the men of lowest intelligence 
stay and endure. A plant under our observation that has neglected 
maintenance of boiler house for years degraded in course of com- 
paratively short time to the point that its efficiency instead of being 
70-72 per cent, as it should, dropped to 47 per cent and in spite of 
higher wages offered to the men than prevailing in the neighborhood, 
the turn-over was above 300 per cent and engineers had to resort 
to hiring negroes, until finally, at a large expense the maintenance 
work was caught up, 73 per cent efficiency on the average realized, 
and men became contented. 



Chapter VI 

MASTERING LABOR PROBLEMS 

ANY change in the economic life of a country by necessity 
readjusts the social relations of productive forces. These 
new relations, reshaped primarily to meet the new conditions 
and requirements the material life, gradually change the habits 
of the people, the mode of thinking and finally formulate new 
ideals. Roman domination of the Ancient World at first created 
and then eradicated distinctions between "Ellin and Jew" and 
lust for domination. When the efficiency of wage earners com- 
pared favorably with slave labor, the new relation found its ex- 
pression in the formula "Liberty, Equality, Fraternity." When 
again, the socially irresponsible control of production failed to 
meet the demands for higher production, the industrial democ- 
racy became the new ideal. No sooner the old order of things 
gives way to the new one but when the old mode of produc- 
tion has already developed all its possibilities and the new way 
appears clear, leading away from the vicious circle of old internal 
contradictions. 

The great conflict between autocracy and democracy has 
more than political significance. The principle of "government 
for the people and by the people," awaits its application within 
the economic relations of the people since it is more and more 
generally conceived that the ignorant and irresponsible control 
of production causes waste and leads to destruction. The alleged 
supremacy of autocratic government either of nations or of in- 
dustries is a fallacy created by the confusion of parts with the 
whole. The relative advantage of Teutonic imperialism was in 
the recognition and thorough application of the principle of co- 
ordination of action and strict accountability for results, and not 
in its arbitrary absolutism. Whenever the people them- 
selves exercise the right of judging the results and actually 
choose their own leaders, there is obviously little opportunity 
to substitute the ideal of oppression for this of mutual benefit. 

What it seems to be correct in respect to nations is equally 
true in the industries. The success of great industrial leaders 

139 



140 

and managers was in the final count due to the adoption of su- 
perior forms of organization weherein the thorough knowledge 
of facts takes the place of ignorance, and cooperation supersedes 
the competition. 

It is obvious that without a thorough knowledge of the facts 
pertaining to all functions involved in production, the possibili- 
ties may not be fully recognized. Moreover, full advantage 
of facilities, materials and knowledge cannot be realized unless 
there is a full cooperation striving at the attainment of the 
highest aim. Hence the emphasis was laid in the foregoing 
chapters on the importance of full familiarity with the elements 
entering into a problem of power production; the all important of 
these is the human element or labor. 

Autonomous Cooperation 

To carry out such a program, a fitting mechanism is to be de- 
veloped. Taylor's functional foremanship offered a logical and 
promising step in this direction, yet its intrinsic limitations re- 
tarded its wide applications. Managerial functions centered in 
the planning department give a strong autocratic smack to its 
"ukases." Democratic spirit of cooperation was sacrificed to 
that of oligarchy by official bossdom; the routine of adminis- 
trative control became by necessity complicated and perhaps 
cumbersome; and finally the success or failure of the enterprise 
so organized hinged on the spirit of the man at the top. So it 
was with the Kaiser — were he animated with the ideals of 
humanity, the Germanic thoroughness would perhaps have been 
bent on beneficial constructive work instead of on destructive. 

Such is the inevitable trap into which the individualistic cult 
of "hero" or "leader" or of "superman" — falls : competitive de- 
velopment of means of oppression cannot last when the base 
begins to shake, and the one on top has to tumble down. 

Ganttism, if the author may be permitted to introduce this 
term to denote the new conception in industrial philosophy, con- 
cieves the wholesomeness of autonomous self-government of 
shops. The success of each contributes to the success of the 
whole since the lowering of quantity or quality of the product 
by one, affects the rest unfavorably. Broadening this viewpoint 
to the boundaries of the whole industry, we can see equally 
plainly the advantages of cooperation over competition ; spread- 
ing this conception to cover economic relations the world over 



141 

we get the lofty ideal of the mutuality of interests of all nations 
similar to this of all shops of a factory, or all the states of a union 
after the protective iriter-state tariff ceased to serve as a means 
of economic holding down. 

The author has advocated for many years the importance 
of recognition of the autonomy of the power production depart- 
ment in the industrial organizations as well as in public utilities 
and it should be obvious to any unprejudiced mind that a 
general planning department, however perfectly organized and 
smoothly running and still less old-type "general" management 
is incapable of wisely directing the peculiar functions of power 
department unless it has in its staff power specialists to devise, 
direct and supervise the specific functions. When this is the 
case the removing of such specialists from the close living con- 
tact with the department they are to direct and placing them 
into an office whose functions are specific and distinct, is void 
of practical advantages. The close cooperation between the 
manufacturing departments and the power department in fac- 
tory, or between the power production department and other 
departments of a public utility is of great importance both for 
the purpose of ascertaining the extent of demands, regulating 
peaks, etc., and for securing materials as well as coordinating 
other functions of mutual importance. 

Mr. J. P. Frey in his critique of the Taylor system of man- 
agement said, "it is unscientific because it has failed adequately 
to understand the human factor and the spirit of our American 
institutions for it makes of one man a task-maker and a task- 
master without consent of the other." Government of a plant/- 
should be like the government in a state, with the consent of the! 
governed. Yet if the political self government is acquired by the 
ignorant people failing to set a wise policy, devoid of far-sighted 
program and prompted in their actions by a desire to get im- 
mediate advantages without thorough consideration of ultimate 
results, they fall an easy prey to neighboring states if they are 
strongly organized and aggressively inclined. Similarly, in the 
case of an industrial establishment, the self-government or man- 
agement by consent should be preceded by a broad and thorough 
educational work, enlightening those actively engaged in pro- 
duction on the matters contributing to the fundamental success 
beneficial first to the establishment and ultimately to the com- 
munity. 

Shop committees and similar forms of representation of labor 



142 

interests in the problems that heretofore have been considered 
a sacred prerogative of board of directors and of management 
are gradually gaining popularity. President Wilson in his 
speech of May 20th said that the "genuine democratization of in- 
dustry, based upon a full recognition of the right of those who 
work, in whatever rank, to participate in some organic way in 
every decision which directly affects their welfare in the part 
they are to play in industry." 

In the problems of such complexity and importance as man- 
agement of public utilities, railroads or industrial plants, numer- 
ous purely technical as well as difficult economic problems 
must be studied, analyzed and presented, before any decision or 
settlement of a controversy may be reached. Mere compromise, 
by its very nature can satisfy neither party for a compromise is 
something that neither party wanted. While many workingmen 
know the shop conditions better than some managers, they 
often lack special or broad knowledge that is indispensable for 
fair and convincing presentation of facts ; again lack of certain 
knowledge essential for the settlement of a dispute occasionally 
leads labor to present demands detrimental to themselves. It 
was the French engineer Le Chatelier who recalled his ex- 
perience with miners who complained against certain settle- 
ment which in fact was far more detrimental to the employers 
than to employees. 59 One of the author's own experiences has 
been that a shop committee failed to obtain the owner's consent 
to install certain safety device because they stated a cost of in- 
stallation prohibitive in price while in reality the cost was less 
than one-tenth the figure. 

For such and similar reasons the workmen are more and 
more inclined to trust their cases to either union officials or to 
attorneys-at-law. Unfortunately neither is fully qualified to 
deal with engineering, managerial and economic problems involved 
and so difficulties and discontent results, which usually works to 
mutual disadvantage. 

The major part of the cases coming under the jurisdiction 
of shop committees and causing industrial disputes call for men 
that are qualified: 

1 To investigate working conditions and processes and 
their effect on workmen and their productivity or effi- 
ciency 



143 

2 To look into safety, hygiene and similar factors affecting 

the work 

3 To study the questions of hours and payments 

4 To analyze the basic causes of grievances or discom- 

fort and report on means of elimination of the causes 

5 To secure data and facts showing the effects of objec- 

tionable features and prepare estimates of results of 
modified practice, showing advantages and expenses, if 
any, of satisfying the demands 

6 To represent the facts before committees on arbitration, 

in courts, before the congress, etc. 

No other professional man is better fitted to fulfill this task 
than the engineer, and it is to be regretted that labor, probably 
due to mistrust, does not employ engineers as it does experts of 
the medical and legal profession. Apparently, labor organiza- 
tions are not quite awakened as yet to the still greater necessity 
of submitting special matters to investigations and studies by 
specifically trained engineers. The problems involved in setting 
tasks for power-plant employees, for instance, cannot be settled 
by mere debating and discussion of opinions. M The underlying 
facts of industrial life cannot be obtained without a great deal 
of scientific research work, and to establish beyond doubt their 
veracity and fairness, or to expose the contrary, requires a great 
deal of expert knowledge and intimate familiarity with the sub- 
ject. Medical treatment is not decided by popular vote — why 
shall the health and happiness of wage earners be left to similarly 
arbitrary method? To avoid any possible misunderstanding on 
this point, the author must emphasize the fact that, while the 
consent of labor is an indispensable pre- requisite for the suc- 
cess of any industrial readjustment (be it methods, equip- 
ment, relations, etc.) this consent cannot be attained by an 
arbitrary decision based on opinion and prejudice. It must 
be based on facts, indisputably established by a trustworthy 
research. 81 

Our social relations are now approaching the stage when 
military discipline is unthinkable in the shops and power plants. 
The men want to do things in the right way but time and again 
it has been demonstrated that labor will not submit to arbitrary 
rule particularly if it comes from incompetent quarters. Again, 
in the power industry, where every process and every operation 



144 

is clearly defined by unrepealable laws of nature, there is neither 
room nor excuse for any form of management but that based 
upon these laws. We need no lawyers or courts to support the 
laws of gravitation or chemical affinity, or electrical phenomena. 
The management system, mastering the production in accord- 
ance with similar elemental laws, needs no other force for back- 
ing but to make public the knowledge of facts. 

In the author's address before the Taylor Society at its annual 
meeting in 1916, he touched upon the subject: "the advocates 
of strict military discipline are apt to imagine that the new 
habits can be forced on the men by fear of dismissal or milder 
disciplinary measures. This may work as long as the men do 
not see their way out of the pressure, which usually does not 
take very long; then the new-comers must be forced into the 
regime at a great expense of time and energy. Meanwhile an 
elaborate system of espionage, bossism and pressure must be 
brought into play if the rule is really to be enforced, otherwise 
the things are done in the prescribed manner only while men are 
under surveillance, or more often it only appears so to the 
casual observers and to the imagination of the advocates of 
big stick rule." 

The obvious advantages of this policy of leading and teaching 
over that of driving and forcing are : 

1 Less effort is needed to lead than to push 

2 Voluntary actions are performed even when not 

watched; a correct method is convincing and, when 
correct habit is formed, the best results follow neces- 
sarily and remain permanently 

3 The cooperative spirit is developed rapidly and from 

within thus insuring its perpetuation 

4 The expense of study, training and bonus are covered 

by a fraction of savings accomplished whereas the ex- 
pense of coercion, forcing and overseeing is not. 

We do not need to shut our eyes to the fact that antagonism 
of interests between employer and employee exists and the 
Utopia of harmonious relations between these two classes will 
remain such until both are absorbed in a new social group. 
The signs of the times are many and they point to the 
fact that public utilities are to be steadily and gradually na- 
tionalized. The same is true regarding other branches of in- 



145 

dustries and this is evident in all countries of the world. More- 
over, it is no longer disputed that the principle of "service to the 
people first" yields larger returns than the old motto: "the pub- 
lic be damned." The task of an engineer called to master pro- 
duction is that of producing things with the minimum expense 
of time, energy and material. So long as he is bent over this 
task, the public at large demands that the industries shall be 
democratised. Democracy in the industry means production 
carried out for the benefit of the community. This change of 
relations brings us back to the fact that the community demands 
the right to say what is and what is not to their benefit. A 
predominating majority of any community consisting of pro- 
ducers (who at the same time^are also consumers) is rapidly 
making itself heard. "Democracy in government, democracy in 
industry, democracy in education" — such seems to be the new 
password. 

Aims of Labor 

While German Kultur and Allied Civilization were locked in 
the deathly grip of their fight to the finish, a detached observer 83 
watching the conflict from the opposite hemisphere declared it 
to be nothing less than the end of the old European civilization. 
There might be a wide divergence of opinions regarding this 
estimation of the event, but numerous facts prove beyond any 
doubt that most of our fundamental conceptions were brought 
into disrepute and definitely shattered. If what we call civil- 
ization was based on the conceptions of special privilege for 
few and arbitrary rulings of masses, it lost the foundation and 
whatever the constructive (or reconstructive) task is ahead of 
us, it should be carried from the bottom up. 

Ancient civilization was based on the institution of slavery ; 
Plato, Aristotle and Xenophon considered that the citizens of 
their republics should live in most complete leisure, since, as the 
latter has said, "Work takes all the time and with it one has no 
leisure for the republic and his friends" ; similarly Lycurgus for- 
bade the Spartans to have any trade. With the development of 
modern machinery, slavery was dispensed with, as unnecessary 
and inefficient, and to-day one horsepower does the work of 
twenty slaves. Private ownership of means of production and 
employment of wage-workers became a characteristic institu- 
tion of capitalist era. During the war this private ownership 
failed to meet the requirements popularly demanded and one 



146 

by one great industrial undertakings were taken from private 
control and placed at the service of a nation or even nations. 
Such was the fate of shipping, of railways and of other means 
of communications. Then came an encroachment on the time- 
honored individualistic competition ; prices and outputs were 
controlled or regulated according to the common needs. Co- 
operation was hailed and competition frowned upon ; profiteer- 
ing condemned and public service praised. Ability to produce 
things commanded credit while mere ownership was heavily 
taxed; work became respectable and idleness ranked with treason. 
("Idle hands assist the enemy" — war poster.) 

These changes were neither local nor casual — they were uni- 
versal and necessary for otherwise the acclaimed purpose of 
making the World safe for Democracy could not have been ac- 
complished. The wage earners could not overlook them and 
notice was taken that steps in this direction are indispensable 
for the common good. Moreover, financing of war, of indus- 
tries, of feeding starved countries was not carried out by a 
group of financiers — it was accomplished by popular subscrip- 
tions, by thrift-stamps, by collections of pennies in public 
schools. Thoughts and feelings of masses were radically 
changed. They realized that they have the power to do and 
undo the thrones, the wealth, the future. The dissolution of 
old conceptions was thus made complete and the new order of 
society loomed on the horizon. We may not, as yet, be able to 
see its forms, but one must be totally blind not to see that new 
industrial relations are being formed in which labor takes a 
far more important part than it ever heretofore enjoyed. 

Moreover, the much abused statement that "labor and cap- 
ital are partners" and "the cooperation of both is essential for 
the happiness of either," became stale and, in some quarters, a 
laughing stock. The enormous production and consumption of 
war materials was not expected to last long as sufficient capital 
was not available; yet the productive labor accomplished what 
was thought impossible, thus proving that capital is neither es- 
sential nor a desirable partner of labor. 63 Again, while it is 
indisputable that capital, as represented by machinery and 
other means of production, is indispensable for application of 
labor, the ownership of means of production need not neces- 
sarily be entrusted to only one side of the partnership ; indeed 
state ownership and governmental control of some most essen- 
tial properties proved to the people in general and the working 



147 

class in particular that the control of means of production, of 
transportation and of natural resources can be operated more 
satisfactorily if "partnership" of capital and labor is displaced 
by public or government holding of these means of production. 



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148 

Such and similar every day occurrences and observations 
during four years of war could not but completely change some 
of the old fundamental conceptions and the aims of labor were 
reshaped accordingly. While in the countries that suffered most 
from the effects of the war the communist ideals sprung out and 
were partly realized, more conservative labor elements as may be 
exemplified by The British Labor Party made a detailed re- 
construction proposal 64 in which it stands for "a great bound 
onwards in aggregate productivity." This, it explains, "cannot 
be secured merely by pressing the manual workers to do more 
strenuous toil, or even by encouraging the captains of industry 
to a less wasteful organization of their various enterprises on 
a profit making basis. What the Labor Party looks to is a 
genuinely scientific reorganization of the nation, as industry, on 
the basis of the common ownership of the means of produc- 
tion; the equitable sharing of the proceeds among all who par- 
ticipate in any capacity and only among these, and the adop- 
tion, in particular services and occupations, of those systems 
and methods of administration and control that may be found, 
in practice, best to promote, not profiteering, but the public in- 
terest." 

The signs are many and unmistakable that labor will claim 
an increasing share in the management and control of the in- 
dustries and plants, and to accomplish that end will seek any 
opportunity to learn, advance, promote and apply such systems 
of scientific mastering of production that help to carry the pro- 
duction for the benefit of the community. Instead of supporting 
waste and mismanagement and opposing economy in efforts 
and use of materials as before, organized labor demands more 
scientific and more humane methods of industrial administra- 
tion. Professor Person, president of the Taylor Society, brings 
out a few interesting examples of this tendency : "... an order 
was issued by Clemenceau directing in considerable detail how 
the Taylor principles should be applied to the organization and 
administration . . . 'to secure economy of labor and of mobilized 
personnel/ It ends with this significant sentence: '(The present 
circular) should not be taken as the last word in the organiza- 
tion of work but as a beginning towards more and more efficacious 
and scientific methods/ In discussing the urgent problems of 
the Soviet rule, Lenine says that the necessity of Soviet adminis- 
tration has been recognized by the Russian people. . . It de- 



149 



mands a conscious mass movement towards a higher productiv- 
ity of labor in comparison with capitalism. ..." 



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The Socialist Party in the United States like the British 
Labor Party believes that the people will not tolerate "any re- 
construction or perpetuation of the disorganization, waste and 
inefficiency" which heretofore flourished in the industry. As one 



IS© 

of the first steps, the Congressional Platform states the follow- 
ing aim: "Power. The coordination of coal mines, water power 
and the generation of electricity under national ownership and 
control has already been proposed by the English Ministry of 
Reconstruction as the only possible policy for the British na- 
tion. The establishment of immense super-power electrical 
plants in the vicinity of mines and waterfalls for the purpose of 
supplying current to large areas of consumers, including the rail- 
roads, offers unparalleled advantages in economy and efficiency 
of public service and the prevention of fuel famine. By such 
system the cost of electricity could be so reduced and the service 
so extended that every household in the nation as well as every 
industrial establishment and farm could be supplied with elec- 
trical energy at almost incredibly low rates. This is the inevit- 
able future of electricity. The Socialist Party demands the 
immediate appointment of a Federal Power Commission with 
adequate representation of labor to make an exhaustive investi- 
gation into this subject and to recommend legislation to Con- 
gress which will embody a comprehensive power development 
policy, as well as proposals for the immediate nationalization of 
the coal mines and the reclamation and conservation of all the 
great sources of water power." 

Perhaps the most significant statement which shows the atti- 
tude of the working masses toward increased productivity may 
be found in the report of joint conference of British Industrial 
Council for the Building Industry. This "Organized Public Serv- 
ice in the Building Industry appointed a committee in February, 
1919, consisting of eight employers and eight operatives and 
adopted (1) 'This committee was appointed to consider the ques- 
tion of scientific management and reduction of costs with a view 
of enabling the building industry to render most efficient service 
possible.' (5) 'We believe that the great task of our Industrial 
Council is to develop an entirely- new system of Industrial con- 
trol by the members of the Industry itself/ (7) It became clear 
at very early stage that there are four main factors that tend 
to the restriction of output. They are: a — The fear of unem- 
ployment; b — The disinclination of the operatives to make un- 
restricted profit for private employers; c — The lack of interest 
in the Industry evidenced by operatives owing to their non- 
participation in control; d — Inefficiency, both managerial and 
operative. (34) Hiring of capital. It will already have become 
evident that the whole conception of organised public service 



i5i 

that we are developing demands the acceptance of these main 
principles as an essential preliminary to that increase of efficiency 
without which the cost to the community can not be reduced. 
a — Regular rates of pay to the operatives that will insure a real 
and satisfactory standard of comfort; b — Salaries to owner-man- 
agers commensurate with their ability; c — A regular rate of in- 
terest for the hire of capital. (54) The consensus of the evidence 
led us to the following additional recommendations : a — That 
there should be more inducement to the most talented operatives 



CLASSIFICATION 


ADDITIONAL 
REQUIREMENTS 












PERCENT 


HORSEPOWER 


PERCENT 


5 10,15 2025 50 100 


SHIPBUILDING 


96.525 


47.2 




























MISCELLANEOUS 
GOVERNMENT WORK 


Id. J 06 


8.3 
















ORDNANCE 


17.458 


8.5 
















TRANSPORTATION 


17.312 


8.5 
















MUNITIONS 


If. 557 


5.7 


■ 














QUARTERMASTERS DEPT. 


7.307 


3.6 


a 














MISCELLANEOUS 


6.836 


3.3 


m 














SMALL WAR INDUSTRIES 


3.789 


1.9 


i 














PUBLIC UTILITIES 


2.145 


I.I 


j 














TOTAL WAR ESSENTIAL 


IB I. 035 


88.7 








■ 








COMMERCIAL LI6HTIN6 


17.008 


8.3 


3 


A 












COMMERCIAL POWER 


6.077 


3.0 


3 














MUNICIPAL LI6HT1N6 


0. 102 


0.0 
















TOTAL NON-WAR 
REQUIREMENTS 


23. 187 


1 1.6 
















^ 


y//> 


i 


:; GRAND TOTAL 


204. 222 


100.0 




















MW£M^m?25BE&^&g!ZZ: 



Fig. 48. — Power Requirements and Available Generating Capacity 

A graphic analysis of a study made during the war for U. S. Shipping Board to 
ascertain the needs of a district. 

to increase their efficiency and to undertake positions of greater 
responsibility; e — A better output will be obtained if the per- 
sonal comfort of the operatives is provided for. . . " 

The quotations we put in italics ourselves. 

Similarly the United Mine Workers of America declared 
their aim at the 27th Convention at Cleveland, O., in these 
words: "We hold that the coal supply of our nation should be 
owned by the commonwealth and operated in the interest of 
and for the use and comfort of all the people of the common- 
wealth. Countless generations of men and women will doubt- 
less follow us, and the American people of this generation owe 
a solemn duty to them in protecting with jealous care and con- 
serving with wise administration those great treasures that a 



J 52 

bounteous nature has bestowed upon us in such generous meas- 
ure." "Under the prevailing system of private ownership, coal 
is mined primarily for the purpose of creating profits for the coal 
owners. The production of coal under this system is character- 
ized by an appalling economic waste. The incomparable natural 
resources of America, and particularly those of timber and coal, 
are being despoiled under a system of production which wastes 
from 33 to 50 per cent of these resources in order that the maxi- 
mum amount of dividends may accrue to those capitalists who 
have secured ownership of these indispensable commodities." 
"Under private ownership, where production is conducted for 
private gain, the spirit of times seems to be: 'After us the De- 
luge/ This must be supplanted by a system where production 
will be for use and the common good, and economic waste will 
give way to conservation of the nation's heritage in the interest 
of posterity." "We, the United Mine Workers of America, in 
international convention assembled, representing the workers 
who have their lives, and the welfare of the dependents invested 
in the coal mines of our country do therefore resolve : 

"That we demand the immediate nationalization of the coal 
mining industry of the United States." 

To understand better the attitude of American workers 
toward mismanagement and waste in industry and to gain 
better insight into growing aspirations and aims the foregoing 
citations are of help. 

Recently the employees at the Rock Island arsenal have im- 
proved managerial methods and thereby increased the productiv- 
ity and reduced waste and needless expenses. 



Right to Be Lazy and the Right to a Job 

A French writer published in the early eighties under the 
title, "The Right to Be Lazy," a sarcastic pamphlet directed against 
the philosophy teaching the producer to reduce his demands 
to the smallest number of needs, to suppress his joys and to 
condemn him to play the part of a machine turning out work 
without respite and without thanks. In more recent times, the 
so-called efficiency engineers and even Dr. Taylor attracted the 
wrath of organized labor, the latter receiving the surname of 
"speedy Taylor," for his propaganda of religion of work. It is 
not our task however to review the history of this misconception. 
Since the time Genesis was written work has been regarded 



153 

as a curse and damnation brought about by sin. The sophistry- 
trying to prove that work is a pleasure fails to convince anyone 
who works for hire, works long hours, works under trying 
conditions, works to nervous and physical exhaustion, works at 
something lacking the inspiration of self-expression or at work 
which fails to produce the joy of converting knowledge into action. 
A plain unsophisticated mind of a sane person revolts at the idea that 
we "live to work" while the plain truth is that "we work to live." 
The greatest advent of civilization was the reduction of the 
working hours allowing the masses more time to live, to learn, 
to improve, and this was accomplished by engineers. The won- 
derful creation of engineering science and art increased the 
productivity of a man to almost an unbelievable extent. The 
power-driven automatic and semi-automatic machinery and 
means of transporting their product to the places of consumption 
relieved the men from an enormous share of physical labor 
formerly required and enormously reduced the time needed for 
production and transportation. A measure of increased produc- 
tivity of labor may be gathered by considering the large and in- 
creasing number of non-producers, salesmen, advertising men, 
bankers, lawyers, soldiers, etc., who are consumers only. The 
future progress of engineering is hard to foretell but it is being 
daily demonstrated that even with our existing means of pro- 
duction vastly more can be produced than now because of poor 
managerial methods, idle machinery, imperfect processes and 
inadequate knowledge of what is being done, how it is to be 
done and what could have been done if the various obstacles 
were removed. In the estimation of H. L. Gantt the industries 
at present are producing about one-quarter of what they are 
really capable of under proper administration. If this is so, 
with the same number of workers employed they could produce 
four times as much goods in the same time or, greatly reduce 
the length of the working day without reducing production. 
In this sense, the right to be lazy, like any right, involves a 
responsibility to see that: 

1 The work is organized and carried as productively and 

efficiently as the state of science and art permits 

2 That the work shall be as safe and agreeable as possible 

3 That it overtax none. 

Such is the task of to-day before industrial engineer, yet 
the workmen are often assailed will fear lest the increased 



154 

productivity will leave to him nothing but an enforced leisure 
and thus no means for existence, for as the Bible said: "He 
who will not work, neither shall he eat." Hence the "right to a 
job" is the right to live. The study of the history of industrial 
development taught us that every improvement, either in ma- 
chines or methods that increased productivity, stimulated the 
consumption of goods to such an extent that a much larger 
number of men find employment in the industry thus deve- 
loped. Yet while this is true, it is equally true that this ad- 
justment takes a certain length of time during which the 
number of men employed in the industry thus affected, tempo- 
rarily drops. The question then arises : how is this con- 
tingency to be met? Under an ideal condition, (i. e., when 
production is carried not for speculation but for common 
good and for use) the miatter may be easily regulated, as it is 
possible to gage the demand. If in this manner the extent 
of the demand is established either for any kind of commodity 
and the productive capacity of the plants is known, the amount 
of necessary labor is thereby ascertained. The same procedure 
would furthermore indicate where more men are needed and 
where there is an excess of unemployed labor; in some locali- 
ties larger production of a certain article may be needed, while 
in some other it may be reduced or even discontinued as super- 
fluous, thus plants and men may be turned to other pur- 
poses. Under the present social conditions men seek employ- 
ment primarily because of necessity of earning the wages offered, 
and everything else is regarded by them as merely contribut- 
ing or damaging incidents. Vocational training is still in its 
infancy so far as power-house help is concerned. Organization 
for supplying trained help, in order to become an effective fac- 
tor must be nation-wide in its activities and its scope of work 
should embrace the daily gathering of information from the en- 
tire country as to men and jobs available, wage fluctuations, cost 
of living and conditions in various localities and industries. On 
the basis of these facts the machinery must be able to quickly 
shift surplus men from one state to another to a place where 
there is a need for them, having transportation and accommoda- 
tions prepared and provided beforehand to the volunteers. By 
an elaboration of such a plan as has been tried by German labor 
unions, the problems of unemployment, inadequate wages, poor 
working conditions, etc., may be successfully ameliorated. The 
crowning success of such organization would be the classifi- 



iS5 

cation of all available men according to their inclinations and 
fitness, so as to intelligently meet the specifications for the in- 
dustrial positions. 

In the summer of 1918 the Department of Dilution and Train- 
ing of the Labor Department asked the writer to submit to them 
a memorandum on the subject of meeting the shortage of skilled 
workmen and the outline of the working plan as furnished is 
substantially as follows : 

"A proof of the necessity of either training or dilution of 
labor should be secured before either is attempted. The general 
warning is given when a productive organization falls short 
of its promises or specifications either in quality or product or 
in the time of delivery. This ■taa.y or may not be the result 
of the labor situation, since it is part of the labor to follow the 
plans provided by the management in using materials and equip- 
ment furnished by the management. The first step therefore 
should be to ascertain whether the industrial establishment ex- 
periencing difficulty is actually using its productive equipment 
full time. 

"(1) In cases where the equipment is idle because of lack 
of orders, lack of materials, poor materials, poor machinery, 
poor maintenance or poor planning, no extra labor, whether 
trained or unskilled would do any good, in fact, it would cause 
further labor shortage elsewhere in the country. 

"(2) In cases where the cause of idleness of equipment is 
allocated to the lack of help, the trade and degree of skill required 
could easily be established and the Department should assist only 
when proof is given that the troubles of the first category are 
non-existent. Otherwise no labor should be allotted to an establish- 
ment where working time will be lost due to unpreparedness of the 
management to use labor productively. ... 

"These informations may be secured by obtaining from the 
concern experiencing a difficulty, presumably on account of labor 
shortage, the graphic reports analyzing time of every machine, 
and showing how much time was spent working and how much 
time idle, waiting for jobs, etc. . . . 

"Our experience taught us that more often, the inefficiency 
of a concern is due to faulty management than to inefficient 
labor. The walk-out at Cramp & Sons and similar occurrences 
are typical instances where working men are first to protest 
against the handicaps created by incompetent leaders of any 
rank. 



IS6 

"Accepting the foregoing as a basis, the mechanism, to carry 
out the program, can be developed following the principle of 
allocating the trouble first and then trying to eliminate the in- 
efficiency before attempting to increase such efficiency as we 
already have. Charting method seems to be admirably fitting 
for the purpose. It is simple, reliable, readily understood by any 
and all and involves minimum expenses for introduction and 
keeping up and has been thoroughly tested for a long time in 
many private industrial establishments and Governmental pro- 
ductive organizations. . . . 

"The time-keeping department or the production department 
of any factory or mill should be able, without extra expense, 
to prepare charts showing useful utilization of men's time, once 
they admit the principle that the object of time-keeping is not merely 
to find out how much is to be paid for the total time but what has 
been done during this time and what should have been done during 
this time, as well. Figure 46 illustrates a characteristic case of a 
shop where management has knowledge of what could be done and 
what was done by men during the working time. 

"One of the possible objections on the part of some manufactur- 
ing establishments, as may be anticipated, is that 'it won't work in 
their particular case.' We do not doubt, for a minute, but that 
there are such cases where the existing management is unable to 
secure the desired information and these points should not be de- 
bated. The task of the Labor Department should be to assist the 
management in establishing such simple means as necessary for 
securing the desired information . . . 

". . . Preparedness for the time when we must fill our new 
cargo space, not with war munitions, but with manufactures (if we 
do not want to go back to exporting our raw materials and the 
buying it back again worked abroad into high-valued product) is 
of immense importance and nothing less than quick adjustment of 
labor and industries can avert the confusion and chaos of reconvert- 
ing the industry from war to peace footing . . ." 

We are now facing the opposite side of the problem. Under the 
untrammeled "free bargain," the workman refusing to accept the 
wage offer or working condition was free to either change his mind 
and, if the employer has not changed his, to get the employment or — 
perish. The unemployed, like the poor, were with us for so long 
a time that we grew accustomed to consider them necessary for our 
salvation. This reserve labor army had to perform a dual manoevre : 
to lower the wage rate by competition in case of supply exceeding 



157 

the labor demand and by expansion and contraction to relieve the 
industrial payroll in days of depression and to furnish dividend- 
grinders in days of boom. To-day, with the probability of unem- 
ployed lending an eager ear to the propaganda of extremists, the 
conservative employers begin to think whether the unemployed will 
not really be instrumental for their reaching Paradise. 

During the War an acute shortage of help in some power plants 
prompted some public utility companies to hire as firemen, the street 
cleaners dismissed by municipalities for inefficiency; the unemployed 
were rare but those employed, began to think along somewhat new 
lines : "// my employer has right to his property as it gives him 
his income, have I not right to my job which is my only source of 
income?" In the past, this right- of workman to have a job was 
light-heartedly denied principally because no means were known 
how to provide work all the time for everybody in the industry 
conducted on the principle of unrestricted individual competition. 
Under such conditions, the amount of commodities that should be 
produced were not known; at one time less men would be engaged; 
then the possibility to sell goods at high price would create a rush 
and, as limit of demand was not known and some mnaufacturers 
possibly did not know how much of the same goods their competitors 
produce, the oversupply will ensue; in order to check the falling of 
market prices due to people's inability to buy these goods the 
production slowed down, i. e., men were laid off. In this general 
manner, the periods of more acute unemployment follow one after 
another in an utterly unregulated way. Again, local condition may 
favor rapid production in one locality, while depression even possi- 
bly in the same trade will reign in another at the same time, yet 
migration of labor was left chiefly to a chance, hearsay information, 
individual resourcefulness and other haphazard circumstances. 

True enough, power industry was subject to these fluctuations 
to a lesser degree than some other branches but it is felt neverthe- 
less in public utility plants and mill power houses whenever the 
demand drops due to increased number of idle machines or whole 
establishments. It is true also that due to the character of the 
work in a power plant a certain number of employees will be steadily 
employed whether the load is heavy or drops to a small fraction 
of the normal, but in any event the fluctuation of employment and a 
chance for employee to lose his job, in time when it is hardest to 
get another, does exist in this industry to an appreciable extent. 

During the war, the United States Shipping Board carried out 
an intensely interesting experiment which is of enormous value. 



158 

Data collected for supply of various commodities were compared 
with estimated monthly demands for the same and results plotted by 
Gantt's charting method (see Figure 47). Now, suppose that the 
curve represents not imports but domestic production; if we see 
as clearly as on this chart that the rate at which certain commodities 
are manufactured are many times in excess of requirements while 
other hardly meet the demand, it may be comparatively an easy task 
to stimulate one and slow down another until the healthy balance 
is established; thus a constant number of workers will be assured 
of permanent employment. This is equally true regarding the power 
industry and relations between the demands and resources. Figure 
48 represents the demand in excess of generating capacity, showing 
percentage of full output analysed by groups of consumers. 

Unfortunately most of the well-meaning social reformers and 
friends of labor are not in a habit of scientifically analyzing the 
facts and to look for solution at the cause of the problem. Their 
customary panacea for unemployment is not along economic facts 
but in compulsory legislative orders to provide work by artificially 
creating it at public expense. It might be that we need new houses, 
new roads, new hydroelectric plants — if these public works are 
socially necessary they should be carried out whether there is enough 
employment or unemployment, in latter case of course the sooner 
the better — but one must see that the men engaged in the project 
are skillful, experienced, and possess the ability and ambition. The 
digging of a canal will probably indirectly help the unemployed 
milliner or seamstress or engraver, but the demand for the goods 
they produce could be increased by some other means, and if the 
public work thus undertaken is performed inefficiently because of 
unfit men engaged, the expense of the undertaking is liable to be 
greater than the benefit therefrom and it might have been wiser 
to spend less money directly as premiums on unemployment insur- 
ance. On the other hand, when production in various industries 
loses its anarchic, uncertain character and is carried out to the fullest 
extent warranted by the consuming capacity of the people, the same 
very public work project will be carried out not as a charitable 
undertaking but as an economic necessity growing out of the natural 
general development. 

At this juncture a criticism is frequently made that with the con- 
tinued rapid development and improvement of technical process and 
increased application of power, the productivity of labor will increase 
to such an extent that we shall again see a surplus of labor. Such 
argument however overlooks two important economic facts; firstly 



159 

we never have experienced the overproduction of goods — we only- 
overreached periodically the purchasing capacity of the people; the 
need for commodities seem to be very far from saturation as yet and, 
secondly, when this will happen (as it eventually may), it would mean 
that the productivity of labor has increased to the point where only 
a fraction of present working hours will be required to produce 
more wealth than ever; hence the length of working day may be 
correspondingly reduced without any diminution of production or 
casting off the surplus labor. 



Qualification of Men 
/ 

At the time the author presented his paper on Task Setting for 
Firemen, etc., before The American Society of Mechanical En- 
gineers in 1913, a discussor called attention to an omission of the 
question of selection of men. The problem of employing fit men 
is quite distinct from this of fitting employee for their jobs. While 
it is unquestionably true that the performance of the plant depends 
on the initial quality of the attendants, it seems to be of greater 
importance to find the way for overcoming the obstacles presented 
by difficulties or even at times impossibility of hiring men with all 
the desired qualifications. As the matter stands in this country, any 
employment manager could testify that the applicants for job of a 
fireman are willing to take almost any other job, if it pays better, 
or is more pleasant. On the other hand, the only three qualifica- 
tions for fireman's job that are generally recognized — strong physique, 
previous experience, and state license — are as vague as unessential. 

If a concern has a chance to choose let us say a fireman, they 
should look for somewhat different characteristics. The first test 
must be concerned with his powers of attention — an untiring ability 
to notice the minute changes in surrounding conditions; the second 
with his resistance to influences which tend to distract fixed atten- 
tion ; and third his general good health, perhaps more particularly his 
ability to resist changes of temperature and strain on the eyes. All 
other qualifications are chiefly local, depending on dissimilarities of 
plant equipment and lay-out, as for instance, in a hand-fired boiler- 
room a short fellow is preferable to a tall one ; in a stoker-fired plant 
muscular strength is non-essential particularly if special men clean 
the fires and ash-pits. Again, previous experience is very often a 
decided disadvantage in a plant where no special provisions are made 
for a thorough training of men on the basis of established facts. 
The old habits acquired under dissimilar conditions of previous 



i6o 

employment may prove to be wrong for the new job. Locomotive 
firemen often fail on stationery boilers, and men accustomed to a 
steady load take a long time to get used to work in a plant where 
the load frequently fluctuates. But above all the requirements for 
a license is to be deplored ; fixed by law-makers for reasons obscure 
to themselves, examinations do not put any stress on the most im- 
portant requirement — the knowledge and experience in economical 
generation of steam; the regulations as to safety are more properly 
within the domain of watch engineers, while the familiarity with 
dimensions, proportions and features of design of boilers could like- 
wise be safely left to draftsmen. 

The basic cause of losses due to hiring poor men seems to be 
in the lack of attraction offered to the better grade of applicants; 
again, the losses due to a large turn-over of power-plant employees 
is chiefly due to dissatisfaction with some condition of employment — 
it may be treatment; hours or wages, but whatever it is, we must 
realize that frequent changes of positions is as much of a disad- 
vantage to the employee as to the employer. 

When, however, the operating practice is standardized and pro- 
visions for "filling" vacancies and training of the new employees 
are properly carried out, both causes of loss are greatly minimized. 
First, the new man should be put to work under the best conditions 
that the ingenuity of management and cooperation with employees 
can devise, which as a rule, is more desirable financially and otherwise 
than it is in an average old-fashioned plant. Secondly, if the employer 
does not look for a "ready-made man" but is prepared to start him 
from the beginning with helpful training, the long period of waste- 
fulness while the new man adapts himself to the new requirements 
(if indeed he can do so without systematic and persistent instruc- 
tions, encouragement and help) is not only greatly shortened but 
when he finally acquires the new habit, he works not "as good as he 
can" but as good as the management knows how. Whatever forms 
are used to keep the man's record one consideration is paramount and 
that is that the man's record reflects the ability of the management 
to lead its men. If men do poor work or are not steady it spells 
incapable leadership. 

The plan of thorough instruction and training for firemen, en- 
gineers, and other plant employees simplifies the problem of securing 
the powerhouse help and in fact, solves the problem by developing 
the skill, intelligence and efficiency of the employee to meet the 
highest requirements for each position. 

Any administration that neglects to provide proper training for 






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the employees, clearly fails to fulfill its duty. The means for such 
a provision, however, are by necessity very different depending on 
the size of the plant. While in a large central station, the plant 
office acting as custodian of information has delegated permanent 
instructors with each shift in boiler, pump, turbine, and high-tension 
rooms, on the switchboard and with the repair gang, a smaller plant 
in a mill or isolated building may be satisfactorily served by a 
single man acting as instructor and supervisor, or even by an outside 
expert serving in this capacity a number of plants. Between these 
two extremes a number of variations are possible in every case 
however, the requirements for peculiar abilities of instructors vary- 
ing accordingly. 

The functions of an instructor" do therefore determine his qualifi- 
cations. He must be at once an expert and a tactful human ad- 
ministrator. Demoralization that may be caused by a lack of either 
is serious and far-reaching, and it is commonly known, that when 
perfectly good orders, issued by the management, fail to produce 
the expected results, the cause can almost invariably be traced to 
the fact that it was expected that the new order would take place 
by itself. The old saying that the best way to doom a thing to 
failure is to give it "a fair trial" is always true whenever a capable 
man is not made responsible for the result to secure which he is 
given necessary authority. 

Again, a power-plant research man shall first of all be scientific- 
ally trained for vigorous, exact and minute observations. He must 
possess in a very large degree a power of abstraction; he must be 
able to concentrate his thoughts and attention on one specific sub- 
ject at a time to the complete exclusion of all else; he must have a 
broad vision and vivid imagination. He should be physicist, mathe- 
matician, economist, and largely a psychologist. To fill such a bill 
is not an easy job and our colleges are giving little help in this re- 
spect, as their programs are calculated to give the students ready 
made formulas and drill them in administering the textbook data 
rather than cultivate in the young men the faculty to see things as 
they are and to do them as they should be. 

Charles W. Eliot, president emeritus of Harvard University, 
justly emphasized the difficulty of securing this high type of men 
(which fact undoubtedly is explaining the general poor efficiency 
of our even best power plants) by stating in a lecture delivered in 
Carnegie Hall, N. Y., this sad truth: 

"The war has made plain to multitudes of people what was known 
before to a few, that human testimony is as a rule untrustworthy, 



l62 

not because the witnesses intended to deceive but because they were 
unable to see, to hear, or describe correctly what happened in their 
presence. This inability to see, hear, touch, and describe accurately 
is by no means confined to ignorant or uneducated people. Many 
highly educated American professional men have never received 
any scientific training, have never used any instrument of precision, 
possess no manual skill whatever, and cannot draw, sing, or play 



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j|ri I st 2 nd 3 r0 4 th 5 th 6™ 7 th 8™ 9™ 10™ IF" 12™ 13™ 14™ 15™ 16 th 

Hour© 

Fig. 50. — Decrease of Efficiency with the Lengthening of the Working 

Day 

The quality of firemen's work is noticeably dropping when they are kept at 
work 8, 12 and 16 hours, although the quantity of work does not change appre- 
ciably as physical fatigue affects the attentiveness more than it does strength. 

upon a musical instrument. Their entire education dwelt in the 
region of language, literature, philosophy, and history. Their habits 
of thought permit vagueness, obscurity, and inaccuracy, and their 
spoken or written statements have these same defects. 

"These facts strongly suggest the urgent need of modifying pro- 
foundly the programs of American elementary and secondary 
schools. They must no longer cling almost exclusively to languages 
and literature and the elements of mathematics. They must give 
a considerable part of school time to the sciences and arts, and to 



163 

the acquisition by every pupil of some skill of eye or hand or both, 
and at the same time must increase rather than diminish the amount 
of training they give in memorizing, in discrimination between the 
true and the false, the good and the false, the good and the bad, 
in the selection of premises, and in sound reasoning." M 

The work of men unfit or unprepared for their jobs is not only 
wasteful, detrimental to the society, and harmful to the employees 
but at the same time it amounts to no less than a misfortune to the 
men themselves. By selecting "fit" men, we do not mean of course 
employment of "ready-made" men but merely men possessing suit- 
able qualifications and at least capable of development, for it is un- 
questionably a duty of industrial administration to adopt, instruct 
and train men to perform function for which they are preeminently 
suited. 

Again, asking for references provides a very easy way for one to 
fall a victim of prejudice and to lose an opportunity to engage a good 
man who was unfortunate enough to work under incapable direction 
or under conditions and surroundings handicapping development and 
demonstration of his capabilities. In the author's own experiences 
he has seen indifferent watch engineers becoming excellent execu- 
tives, poor clerks proving expert combustion engineers, wagon 
drivers turning efficient clerks and men with most atrocious reputa- 
tion proving the most trustworthy, reliable and loyal managers. 

The Working Day 

• 

The eight-hour working day seems not only to gain universal ap- 
proval but international recognition as well. Yet the time, this most 
important measure of human life, has surprisingly little meaning so 
far as measuring the productivity is concerned, for the mere lapse 
of time reflects by no means the use made of it. In other words, 
the statement that the working day shall be of eight hours dura- 
tion actually means only that the workers are granted sixteen hours 
per day for recuperation, propagation, recreation, etc. It is of course 
true that with a given development of technique of production, ac- 
cepted standard of workmen's training, customary intensity of work, 
existing managerial organization, and prevailing understanding as to 
a reasonable daily output per man, an average may be determined 
what rate of production corresponds to an eight-hour working day. 

Frederick W. Taylor in his paper on Shop Management lays 
particular stress upon the fact of "soldiering" by the workmen. 
This work has been followed up by a wealth of investigations (some 



164 

of great minuteness, exhaustiveness and accuracy), time studies, mo- 
tion studies, micromotion studies, etc., which have disclosed the fact 
that a very large number of variables enter and so radically influ- 
ence the productivity of an hour's work, and that the measurement 
of time has gradually become of an auxiliary character, merely in 
relation to a prescribed amount of work. Serious objections raised 
by some labor organizations to "speeding up" and prohibition of the 
use of stop-watch observations of the workmen in governmental 
establishments furnished additional proof that the length of the 
working day is only a vague measure of productivity of labor, if in- 
deed it is a measure at all. 

The investigations conducted along radically different line of 
thought disclosed still more startling and important facts. Data col- 
lected by Gantt, and those using his method of investigation, demon- 
strated not only that a large proportion of work done in various in- 
dustrial establishments is being done without any knowledge as to 
now long the jobs should take (see Figure 46) but that an enormous 
amount of time is necessarily lost by workmen on account of an en- 
forced idleness due to various reasons beyond their control. It was 
thus shown (see Figure 49) that the productivity within the same 
time could be nearly doubled through better attention to managerial 
functions, leaving the personal efficiency of the workmen as it is. 
Or, putting the resume of this lesson into different wording, the ob- 
servation over a very large number of great variety of American in- 
dustrial establishments prove that with proper managerial methods, 
though with the same equipment and the same efficiency of work- 
men, the same volume of production may be secured in six hours as 
now takes ten under faulty management. Lord Leverhulme in his 
English factories actually has proven this possibility. With gradual 
improvement of managerial methods and responsibility for the avoid- 
able idleness assumed by the administration of the establishments it 
was only natural to observe steady shortening of the working day and 
in nearly all cases where the management insist on longer hours 97 it 
is due to its incompetency to avoid the loss of time during which the 
employees are prevented by some form of mismanagement to em- 
ploy their time productively. 

It thus appears that the length of working day depends upon : 

1 Efficiency of the management 

2 State of productive technique 

3 Attitude of workmen. 



i6 5 

Each factor in itself is very complex and all of them are in individual 
cases interlinked. Assuming for instance that the state of productive 
technique is constant (as in an established industry using a standard- 
ized process and existing equipment, etc.), the managerial methods 
and policy has nevertheless a far greater influence upon the daily pro- 
ductivity than the attitude of working men, for in the last count, 
their attitude is in itself largely a creation of management. Again, 
while under the regime of private ownership and wage system either 
of those factors independently is capable of totally wrecking the 
enterprise, only the management or rather administration, possesses 
the necessary means for increasing the productivity of hour's work. 
What we termed as the attitude of the workmen is perhaps the 
most complex thing embodying^all the cumulative effects of the 
entire social-economic structure of society. It is beyond our scope 
to dwell upon this analysis; in passing, as an illustrative glimpse, 
let us mention at random a few distinct contributing elements. The 
treatment accorded the workmen by owners, managers, and foremen 
is likely to create either an attitude favorable or hostile to the pros- 
perity of the establishment. The training of employees, if conducted 
with the sole intent to "save a dollar," is met with passive indiffer- 
eritism, while if carried on with the object of assisting the employee 
to better himself in his vocation (which will be of help to him any- 
where and only incidentally to be of benefit to his employer) it 
does prove fully successful and goes a long way toward industrial 
peace. Suffice it to note how apathetic and even antagonistic are 
the men when taught something they know from their familiarity 
with the trade will not be applicable in their future places of em- 
ployment. One more example of broadest nature is rendered by 
class-consciousness of the workmen in determining their attitude 
toward the increased productivity of labor. Men well read on the 
subject of economics do not entertain the same fear before scientific 
innovations that tends to increase the productivity, for they have 
learned that the ultimate result of improved methods means growth 
of the industry and better conditions of employment. It is not so 
however with uneducated and unsophisticated men : they resent the 
improvement, lest to-morrow their higher productivity will squeeze 
out of employment some fellow workman. This attitude however 
is rapidly waning under the influence of the lessons of the War 
and more profound thinking done on the subject. In the Resolutions 
on Reconstruction, adopted by the British Labor Party in June, 1918, 
the need for increased production is mentioned at the head of the 
document. It specifies and modifies this aim in these words : ". . . 



1 66 

The conference recognizes that it is vital for any genuine social 
reconstruction to increase the nation's aggregate useful commodities 
and services; that this increased productivity is obviously not to 
be sought in reducing the means of subsistence of the workers 
whether by hand or by brain, nor yet lengthening their hours of 
work, for neither 'sweating' nor 'driving' can be made the basis 
of lasting prosperity . . ." 

With these clear-cut explanations the demand for the increased 
production means nothing else but a challenge to the industrial 
managers to attend to their jobs for the benefit of the nation. About 
one year before the above statements were proclaimed, Sidney Webb, 
professor of public administration in the University of London, 
stated that the function of the manager is "to promote the efficiency 
of the enterprise; or to put it more shortly, to increase its net pro- 
ductivtiy . . . But the reduction in the cost of production effected 
by the management must, to be justified, be a genuine decrease of 
cost, that is to say, a reduction of the human efforts and sacrifices 
required per unit of output . . ." " 

Here again we return to the question of working hours. Lord 
Leverhulme in his recent book, published in this country by Henry 
Holt & Company, quotes Samuel Gompers as saying: "Bring in 
all the improved and new tools you can find. We (union labor) 
will help you to improve them still more, and we will get the utmost 
product out of them ; but what we insist on is the limitation of hours 
of labor for the individual to eight." Commenting on this state- 
ment the author adds : "That is almost word for word what I have 
said except for the eight instead of six. We want higher wages, 
shorter hours, a larger production of everything, so that we can get 
a cheaper cost. Without that cheaper cost we can have no funds 
to pay higher wages. Higher wages are merely a shadow unless you 
have lower costs giving increased purchasing power with the higher 
wages; and I believe with that and shorter hours we can realize all 
that we are striving for." For many years past this viewpoint was 
developed and advanced by the author and it has been referred to 
before earlier in this work. It is interesting however, to record 
Leverhulme's exposition as an indication that the economic status 
of England under the post-war conditions made that country realize 
the fundamental truth of economics viewed from the standpoint of 
service. Similarly, Walther Ratenau, Technical Director of Allge- 
meine Electricitats Gesellschaft in "The New Political Economy," 
admits that "the progress of the country's development and success 
in international relation no longer depends on profits and dividends, 



i6j 

but on wise economy of human energies/' We must not forget, if 
as a nation we desire to develop, that every ton of coal wasted means 
not only so many needless hours of work, not only so much wanton 
destruction Of our natural resources but that it will inevitably result 
in a shortage and dearth of all essential commodities. 

The six-hour workday advocated by Lord Leverhulme in his 
opinion: "can be applied forthwith with enormous gains in cost 
of production, provided the supply of raw material and of labor is 
available and the demand for products exists." "There could be no 
question of desirability and advantages of shorter hours in any indus- 
try where the overhead charges are equal or larger than the cost 
of wages." In the chapter on equipment the reference was made 
to the large expense incurred or°bverhead in an idle plant. While 
in the case of a central power station the applicability of this criterion 
alone may appear obscure, suffice it to say that a public utility or 
factory plant serves industry to a large extent. With shorter hours, 
shift work will become indispensable and consequently the idle time 
of expensive equipment provided for part-time only will be greatly 
reduced. 

Again, in the power industry, it may be shown clearer than in 
some others that shorter hours have other strong arguments for 
its adoption. A typical comment is to be found in a letter which 
the author received from an American engineer of note, a manager 
of an industrial plant, written after the author's suggestion to sub- 
stitute for the firemen's two twelve-hour shifts three eight-hour 
shifts. 

"We did carry out your recommendation on the reduction of 
hours of work for firemen and certainly have found this highly 
satisfactory. 

"We believe that the eight-hour shift pays us, for the following 
reasons : 

1 We have been able to get and hold good firemen 

2 While we have not the accurate data to support opinion, we 

feel satisfied that there is a saving in coal 

3 Our variations in steam pressure have been practically elim- 

inated. 

Fatigue 

Closely bearing on the subject of length of working day and 
intimately relating to the economy in power production is the question 
of fatigue. It is not within our province to discuss here the effects 



1 68 

of fatigue toxines on the nervous system and vitality of workers 
for many excellent researches have recently been made on the sub- 
ject and to these we shall refer the readers. The point of immediate 
importance is the ill-effects of fatigue on industry (and hence 
society), and some means of its elimination. It has been pointed 
out by those studying the subject that the greatest proportion of 
occupational fatigue is of nervous origin. Charles S. Myers, Director 
of Cambridge Psychological Laboratory, has explained that "the 
central nervous sysetm (the brain and the spinal cord) acted as a 
protection against muscular fatigue, and it was only in the extremely 
strenuous work of comparatively few occupations that there was 
a serious degree of muscular fatigue." Indeed, when a person was 
actually fatigued, he might temporarily do far better muscular work 
than when he was not, for certain status of fatigue produce a feeling 
of ability to work, though the work may fall very short in quality 
if not in quantity. This fact is of great importance to power-plant 
work, where the quality of work is of paramount importance while 
quantity economically is of very slight value. In the case of fire- 
men attending hand-fired furnaces numerous tests are on record 
plainly indicating that as fatigue grows, the ability to shovel coal 
into the fire door does not appreciably diminish within reasonable 
limits, while the quality of combustion is getting steadily poorer as 
indicated by number of pounds of steam produced per pound of coal. 
A typical summary of twenty-six tests made by the author, of 
which eight were of sixteen hours duration, are graphically repre- 
sented in Figure 50. It appears from these tests that if the quality 
of eight-hour work taken as 100 per cent, the reduction of working 
day to six hours increases the efficiency slightly less than one-half 
per cent, while the increase of the working period to twelve hours 
a day reduces the quality of work about 4 per cent and further ex- 
tention of work to sixteen hours drops the efficiency 8.5 per cent. 
Great accuracy cannot be expected from these observations as they 
were made occasionally and with men habitually working eight hours 
a day. The slight improvement shown on the six-hour shifts may be 
explained by the fact that their former habitual eight-hours work 
did not give them sufficient previous rest to accumulate a reserve of 
nervous, mental and physical vigor; again, keeping men longer than 
usual, (either purposely as in the twelve-hour instances or on account 
of sudden illness of relief firemen as in cases of sixteen-hour work), 
may tax their ability to concentrate and capacity for work but not 
nearly in the same degree as it would be if the same men were regu- 
larly working twelve or sixteen hours per day. In fact the higher 



169 

quality of the eight-hour men is clearly seen when men who for 
years worked eleven and thirteen hours per day were put on eight- 
hour shifts ; in such instances their efficiency increases at least 4.5 
per cent and in several observed instances 5.6 and 6.2 per cent. These 
figures again are not entirely indicative of the beneficial effect of 
shorter hours for the ill-effect of previously accumulated fatigue, 
through years of long-hour work, could not be expected to disappear 
in a few months. In all cases of our recorded observations men 
themselves were unaware of the fact that data of their work will 
be used for this purpose. 

In cases of mechanically-stoked boilers the physical fatigue plays 
a subordinate role whereas factors of nervous and mental origin 
obviously predominate. It is sigriificant to note that the monotony 
of work in fire rooms equipped with stokers whose motions are 
hardly perceptible, where the silence or monotonous humming is 
seldom broken and illumination usually best adapted for slumbering 
meditations, has a most ruinous effect on the economy. The feeling 
of weariness and fatigue arising from this deadening monotony 
makes long hours for firemen not only nerve-wrecking but highly 
extravagant from the viewpoint of economy. While periodic rest 
and recreation may prevent large turn-over of firemen and a don't- 
care spirit, and such means for dispelling the monotony are ex- 
tremely valuable both from the standpoint of welfare and of econ- 
omy. With almost no exception, the rule that proportionally larger 
savings of fuel may be made in the mechanically-stoked boiler rooms 
than in the hand-fired ones, is to be attributed principally to this 
fatigue-producing monotony. Installation of instruments, requests 
for log-keeping and brighter lighting alone have shown in the 
writer's experience a marked increase in economy, sometimes reach- 
ing 20 per cent improvement in efficiency. Yet such measures 
alone cannot be depended upon to produce lasting effect as they 
themselves, in course of time, will lose their stimulating value of 
novelty and become familiar, monotonous adjuncts of the "old dirty 
hole." Intellectual awakening, training, competition, sporting spirit, 
bonuses and other forms of incentives are therefore producing as a 
rule favorable results, even when clumsy and unfit. Furthermore if 
inaugurated with proper thoughtfulness, upon a thorough analysis 
of all circumstances and in accordance with a far-sighted policy, these 
and similar measures are completely regenerating the spirit. 

Many methods and various kinds of apparatus have been proposed 
for studying and measuring fatigue ; among them being ergographs, 
Krapelin's instruments, Gilbreth's methods, and Lovatt and Martin's 



170 

dynamometers. Their value is usually greatly reduced by the fact 
that while the subject is under observation he is stimulated by a 
complete change of work, surrounding and line of thought. The 
best means so far known of estimating occupational fatigue is by a 
study of hourly output during the course of a- day; another way 
is to observe the power used from hour to hour. Diagrams of power- 
output from a central station, having no traction load, are in this 
respect interesting if allowance is made for the amount of electricity 
used for lighting. Figure 51, showing the fluctuations in power demand 
for driving various machinery in an industrial community, may be 
compared to advantage with charts obtained from observation on a 
number of accidents arising through carelessness caused by fatigue 
—^see Figure 52), and relation between hourly outputs and power 
used (see Figure 53). 69 The valuable part of these comparisons 
even of much dissimilar cases, such as the purely manual work of 
dock laborers, highly mechanistic work in machine shops and mono- 
tonous work of spinning mill and a group of industries such as col- 
liery, foundry, tailor establishments, quarry, china-ware works, re- 
pair shop, etc., both in the United States and in Europe, seem to 
establish beyond much doubt the similarity in waves of fatigue and 
efficiency. 

But generalization from a typical case or from individual test, 
however interesting, lack nevertheless the indications as to how 
the fatigue accumulates from day to day during the week. Referring 
again to Figure 51 the Monday chart undoubtedly shows the "feeling 
of fatigue" after Sunday's rest; again while the power demand is 
fairly steady and the peaks uniformly high in both morning and 
afternoon they do not reach the same height as on Tuesday when 
the feeling of realization of fatigue is somewhat worn off ; the periods 
of high output during spells are noteworthy by their durations. On 
Wednesday morning the fatigue is not felt as yet, but in the after- 
noon it begins to manifest itself by the steady declining use of power. 
Thursday is a day when the industrial community becomes really 
tired ; after a short effort in the early morning the work drags 14 
or 15 per cent less actively than on Tuesday. On Friday a supreme 
effort is made at the start of the day, but its collapse follows at once 
and the output rapidly falls in an avalanche fashion to the lowest 
point on the record. Saturday morning finds men without any ambi- 
tion left — no peaks indicate the absence of the morning spell — al- 
though the men probably being spurred by anticipation of the holiday 
and some likely rushing to finish their week's tasks. 

The accumulative fatigue, so plainly evident from these graphs 






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Fig. si. — Fluctuation of Power Consumption Indicating the Influence of Fatigue 
Composite diagram of electrical load of a public utility plant carrying diversified industrial load. Monday's incitement is apparent. Gradual accumulation of fatigue in the industrial community is plainly indicated 
by the steady decline of power used. A week of four working days and fifth day as a holiday may increase totafannual production. 



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sumption; as result of fatigue — less work is done and less care is taken. 



172 

is of utmost importance; it seems to indicate not only that the 
seven-day week, while suitable for biblical times and occupations of 
that degree of civilization, is too long for our days of strenuous 
efforts. 70 It suggests, however, the desirability of securing similar data 
for the fifty-two weeks of the year showing the accumulation of 
fatigue throughout that period. Unfortunately this kind of data is 
exceedingly difficult to secure because of seasonal fluctuation of the 
amount of work, number of employees, climatic changes, and numer- 
ous other interfering factors. 

However, these wavy lines of fatigue and spells have a great 
deal more than academic value. By a careful study of them the pos- 
sibility of combating the ill-effect of fatigue on health, safety, and 
productivity may be devised. In certain manual operations per- 
formed in power plants such as wheeling of coal, the intermittent 
work and rest periods were arranged after exhaustive tests with 
the result that the men who were fatigued and ready to "fire the 
job" not wanting to "kill themselves" by wheeling in 45,000 pounds 
of coal in twelve hours were made contented, and though the job is 
a "cinch" when, by following instruction, (Figure 71) they wheeled 
in 60,000 pounds in eight hours. 

The reduction and general gradual elimination of fatigue through 
adequate rest and proper recreation, better adapted tools (see Figure 
54A) and surrounding of work, substitution of interest in work 
for monotony, etc., is the task of utmost importance from the view- 
point of national economy as it at once not only conserves the 
health of the nation and increases the productivity and well-being 
of the community but it materially conserves our fuel resources for 
the posterity. The task of engineers viewed in this light is to 
provide opportunities for leisure rather than to invent new yokes and 
tread wheels. 

Universal Labor 

In the past the use of terms "manual labor" as opposed to "mental 
labor" has been warranted, as lines of distinction were decidedly 
drawn by the nature and conditions of the work. With the enor- 
mous advance of technique and the advent of automatic machines 
this purely external distinction has been obliterated however in many 
instances. A fireman graduated from Cornell University and from 
Stevens Institute, with an M. E. and Ph. D. analyzing coal, ashes 
and gases, making deductions from instrument readings, adjusting 
conditions controlling the chemical processes of combustion and 
physical phenomena of steam generation, getting wages twice ex- 



173 

ceeding these of an office worker, tangles inseparably all our old 
conceptions of the subject. A different classification seem to be 
more in order — this between cooperative labor and universal labor. 
Under the first class there falls all labor performed in cooperation 
with living working individuals, and aimed toward the production 
of any material results, whether by use of brains, muscles or both, 
while the universal labor is conditioned not merely by cooperation 
with living fellow-beings but by ideas and work of those who have 
gone before and aimed not merely toward the production of a par- 
ticular material thing but toward the discovery of unknown facts 
and development of new methods. The greatest benefit accruing 
from this scientific labor for humanity is usually exploited in the 
most shameless manner. This class of men, working mostly indi- 
vidually, are not organized to collectively resist the unfavorable 
terms of individual bargains. The beggarly compensation they re- 
ceive is in no wise commensurate with the lavish benefits derived by 
the enterpreneurs acquiring their discoveries or inventions of new 
methods and means. Professors, working for salaries lower than 
wages of coal passers or ditch-diggers, inventors starving to death 
while their patents heaped fortunes to others, and engineers getting 
one-fourth of one per cent of the value of their services are examples 
only too well known. The greatest danger to our civilization and 
future progress is indeed in this systematic discouragement of crea- 
tive, scientific work and art; driving this class of men through pri- 
vations, discomfort and even starvation out of existence is bound 
to bring our development to a standstill and degrade our civiliza- 
tion. 71 

A. The foundation of our economic, industrial and business 
system lays in the service rendered by all the preceding genera- 
tions of humanity. A sewing machine is capable of increasing the 
productivity of its operator not only by the amount of labor worked 
into it by the mechanic who made it, but the integrated services 
of all the scientists, philosophers, artisans, etc., and of all those 
who directly served to make their life and work possible back 
from the ages of primitive men. If this were not so, the produc- 
tivity added by the use of a machine would be equal only to the 
productive efforts expended in its construction. The laws of Mayer 
and Lavoisier, that energy and matter cannot be created or anni- 
hilated, would receive its death blow by the first yard of stitches 
made on the machine in excess of the energy expended by all the 
living cooperating workers. The law of nature remains in fact 
inviolate, but the "time saving" capacity of machines is the mani- 



174 

festation of the service of dead men, who passed to us their ideas 
and knowledge. This ever-increasing accumulation of our material, 
intellectual and spiritual wealth is, therefore, not so much the fruit 
of our toil as that of preceding humanity. 

B. The steam engine, for instance, is not the creation of Watt 
nor is the power loom the invention of Hargrave alone. Philos- 
ophers and thinkers, who discovered the laws and forces of 
nature, the chemists and metallurgists, the technologists and en- 
gineers, scientists, doctors and school teachers, all have contributed 
to develop a state of science whereby our knowledge today is so 
immense that we can perform work and accomplish things short 
of marvelous. No man can today further develop the technique 
of production, unless he is helped by this vast amount of knowledge 
which was accumulated in all countries and in all ages. We cannot 
even begin to count the number of these brain workers, who have 
died long ago, no matter how small was their individual contribu- 
tions, the total of which is so great that it easily explains why we have 
today such labor saving machinery and apparatus, which apparently 
could produce more than all of us living people could possibly 
produce alone, within the period of our short lives. 

C. In the case of coal for instance, it takes on the average four 
men hours to get out and deliver one ton of coal. But this one 
ton of coal, if burned under the boiler can develop at 10 per cent 
efficiency, something like one thousand horse-power hours. This 
energy of four miners, one fireman and one- engineer and a few 
people to help them in this work, which in total would not be 
equal to even five horse-power hours, is capable of saving over 
200 times as much labor when this mechanical power takes the 
place of human work. In this case, we get the benefit not only 
of inventions and ideas of the past generations but we also draw 
fully from the stores of nature. 

The production of power has always been in the hands of en- 
gineers who are preeminently masters of materials and students of 
the laws of nature. The very foundation of engineering activity is 
the knowledge of facts, measurements, the relation between causes 
and effects, and the interplay of phenomena, the engineers are called 
to master, is reckoned in terms of mathematical equations and for- 
mulas but — what sarcasm ! So long as the engineer remained a satrap 
and an obedient servant of his master, his knowledge, initiative and 
ideas counted for naught — he was paid to carry out the will of his 
employer! The law-maker and the money-lender were taught by 
sad experience that improper design or faulty calculation spells 



175 



damage and money loss, but once physical safety of investment is 
assured, the operating perfection mattered little, so long as the losses 
in the power production could be covered up by other opportunities 
that business presents. Moreover, bromided accounting showing a 
net revenue can cause no concern regarding the extent of power 
losses as it has no means to disclose and measure them. Hence the 

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Fig. 53. — Hourly Factory Outputs and Power Consumption as an Index 

This chart based on observations of the Director of Cambridge Psychological 
Laboratory, Mr. Ch. S. Myers, establishes the relation between output and power 
consumption. Compare with Fig. 51 of decrease of power consumption during 
the week. 

boilers were equipped with safety valves and water gages ; generators 
with voltmeters and circuit breakers, feeders with time relays, while 
the instruments enabling the operating force to adjust the conditions 
for the best economy and to measure the efficiency attained in each 
stage of the transformation of energy, from coal pile to its ultimate 
use, were generally ill favored by investors. 

While the economic structure of our social and industrial rela- 
tions started to shake to the root under the effects of the World 



176 

War, the problem appeared before the investing class in a new 
aspect. It is no longer the question of losing little in one direction 
and gaining more somewhere else. The wanton destruction of our 
fuel resources in mismanaged power houses appears from time to time 
as a ghastly spectre of fuel famine 72 ; the power shortage threatens 
to stop the dividend grinding machinery and the day of reckoning 
has come. 

The relief was sought however in the old, time-honored method — 
more machinery, better equipment, special privileges. The govern- 
ment was asked to furnish the money to modernize "public utilities," 
the government was forced to issue priority orders, the public had 
to pay excessive cost of new construction carried on under abnormal 
conditions. The volume of electrical business multiplied, even smaller 
rate of profit would yield under such conditions a larger bulk of 
dividend but in spite of it all petitions were filed to raise rates of 
electricity, to increase fares, to discontinue transfers, to permit 
skip-stops, etc., all of which has been done contrary to the advices 
of engineers and against the benefit to the public. The poorly paid, 
and little respected body of engineers had no voice in the matter of 
national economics and production. Lawyers, not engineers, were 
asked what to do and how to do it and after due debates by those 
who know nothing of the subjects the financiers and manufacturers 
were allowed to do it. And they did. . . . 

We do not need to be surprised at the frequent public statements 
that the "dollar-a-year" patriots were "over-paid" for their services 
for indeed their intentions were far better than their education and 
accomplishments. Even the engineering societies — these bodies rep- 
resenting the universal labor — showed a remarkable degree of modesty 
if not a self-denial in recommending for engineering leadership those 
who could provide employment rather than knowledge. Seemingly 
the principal reason for this subordinate role that the universal labor 
is permitted to play in the industrial and economic development of 
the country is our proverbial richness in natural resources. When 
the shortage of fuel began to be felt, the attention was turned by 
the force of habit to those who had and to those who could protect 
their title, that is to financiers and their legal advisers. To be sure, 
they had to ask engineers' counsel but whether they were to follow 
the advice given or not, was left to the arbitrary opinion of the 
former. 

The progress in the utilization of fuel and power, made possible 
through the efforts of the universal labor, may be judged from the 
coal consumption per horsepower hour. While in the early forties 




Fig. 54. — Fatigue-Producing and Energy-Saving Shovels 

No man with short-handle shovel with too small a scoop could live up to 
instruction card for passing coal (Fig. 71). Unless he is using proper kind of 
shovel, saving thousands of foot-pounds of work, fatiguing unnecessarily the 
muscles of the back, the fatigue will injure the man and limit the output. 



177 

of last century the cotton districts of England were generally con- 
suming from ten to twelve pounds of coal per horse-power hour, 
to-day only one-fifth the coal is needed to produce the same work. An 
extremely interesting review of the progress in power utilization 
may be found in a report issued October 1852 by L. Thorner, in 
which he quotes from a letter of the famous engineer James Nasmyth 
of Patricroft, the inventor of the steam hammer. 73 

The effect of improvements in power generation, as well as in 
transmission and mode of running the working machinery, may be 
found on page 58 of the Rep. Fact, for October, 1852. Accord- 
ing to Redgrave the reduction in cost of power generation and 
consequent modification of factory /processes brought in a typical 
instance the following changes in^arning capacity of the workmen 
and in number of children employed: "In October, 1840, his firm 
employed 600 laborers, of whom 200 were less than 13 years old. 
In October 1852 they employed only 350 laborers, of whom only 
60 were less than 13 years old. The same number of machines, with 
very few exceptions, were in operation, and the same amounts were 
paid in wages, in both years . . ." In other words the earning 
increased over 70 per cent and child-labor decreased to almost one- 
quarter of its number. Another firm (see Factory Report 1863, 
page 110), using larger engines "can drive the same number of 
spindles with one single driving shaft, and thus saves from 60 to 
80 per cent for gearing as compared to other firms. This, further- 
more, results in a great saving of oil, grease, etc. In short, with 
perfected installation in his factory he had saved at least 10 per cent 
in labor not to mention great economies in power, coal, oil, grease, 
transmission belts, and shafts." 

Within the last twenty years while the progress in devising more 
efficient power equipment shows comparatively small improvement — 
a new avenue has been opened for securing large economies — namely 
by devising methods whereby the daily average operating efficiency 
is increased so materially that wherever these methods were con- 
sistently applied a saving from 20 to 50 per cent were secured. 
Though this intensive production was only made possible through the 
work of engineers and enormous wealth was thus accumulated, 
they themselves, these trained engineers, inventors, scientists and 
organizers, are not only worse off to-day than they were years ago 
but even relatively worse than the men who do manual work. 

The application of scientific discoveries and methods to industries, 
and the introduction of labor-saving machinery lavishly contributed 
to the intensification of production and increased productivity of 



178 

labor. Yet, as it has been with the introduction of power looms, 
steam engines, railways, linotypes, etc., cooperative labor itself did 
not take kindly the work of the individual labor. The viewpoint of 
the working class was plainly stated some two scores of years ago 
in these words of A. Bebel : 

"Everyone in practical life knows with what suspicion the work- 
ingman to-day regards every improvement, and every invention intro- 
duced into shop. And he is right. He rarely derives any advantage 
therefrom; it all accrues to the employer. The workman is assailed 
with the fear lest the new machines, the new improvement, cast him 
off to-morrow as superfluous. Instead of gladsome applause for an 
invention that does honor to man and is fraught with the benefit for 
the race, he only has a malediction on his lips." 

The fallacy of such an attitude would be obvious if competition 
is replaced by cooperation since such increased productivity would 
then make possible the satisfaction of higher wants. Says the same 
writer : "Especially will the productivity of labor rise through the 
discontinuation of hundreds of thousands of small plants conducted 
with imperfect equipment. But the large establishments could, with 
hardly any exception, be conducted more rationally than now so that, 
aided by the most highly perfected technical process, an infinitely 
larger demand could be supplied. The share of each raises with the 
productivity of labor and increased productivity again makes possi- 
ble the reduction of hours of work and acquisition of skill in many 
directions." 

This increased efficiency must however be properly directed be- 
fore it becomes a real boon to society, as all these wonderful crea- 
tions of engineers and scientists might easily become the accursed 
means of destruction and oppression of one part of the society by 
another. 74 And here again, there opens a new and fertile field for 
the application of universal labor. 

So long as scientific methods of intensifying productivity were 
monopolized for private gains and not for public weal, the periods 
between industrial depressions due to overproduction shortened, the 
army of unemployed increased, but the purchasing capacity of the 
people, overtaxed by the cheapening of production in individual 
plants, did not affect the market prices at large. On the other hand 
the results of these economic conditions lowered the physical stand- 
ards of the workmen, and prostitution and birth-control gained 
headway. 78 

Under such conditions, when 5 per cent of the population have 
almost the entire national wealth, leaving but little to the other 95 



179 

per cent, the talk of industrial democracy is but, "sounding brass 
and tinkling cymbals." The United States census statistics pictorially 
showing in Figure 5 that things have not gone better since this was 
written may also be gathered from such reports as that of the Director 
of the Bureau of Child Hygiene, Department of Health, New York, 
according to which in 1916, 100,000 or 10 per cent, of the school 
children were underfed, while in 1918, 21 per cent are undernourished 
and 61 per cent are on the border line. Again, when our Federal 
Trade Commission admits that some 78 per cent of our business 
corporations are managed so as not to get (or show) any profit, it 
means that they can not properly take care of their employee, it 
means that lowered productivity of labor is as inevitable as the 
waste of fuel and inefficiency When the plant is run with poor 
equipment and improper methods. Such are some of the problems 
for solution by the universal labor or engineers par excellence. 



The Position of An Engineer 

The task of an engineer has often been defined as that of secur- 
ing a maximum product for a dollar's worth of expense. We feel 
that in order to make this definition free from misinterpretation we 
must put some capitalization on each man capable to work and 
charge against the national debit every hour lost through misman- 
agement, lack of work, lack of skill, sickness, discontent, poor nour- 
ishment, poor transportation, and particularly through misapplied 
effort or labor directed to no useful purpose. And only from this 
broader, national standpoint, we may hope to realize the true mean- 
ing and enormous value of the so-called "industrial paradox" "that 
high-priced labor may produce cheap, and low-priced labor may pro- 
duce dear commodities" 

Gantt and other industrial organizers have since discredited the 
fallacy that it is necessary to have low wages in order to have low 
costs, which is detrimental to all concerned. 78 On the other hand 
the increased productivity of labor under the condition where the 
production is carried not for the benefit of the entire community or 
the country but merely for the private gain of an isolated group, the 
laborer feels that he has nothing to gain. Furthermore, the old 
school of management seeing little beyond the trial sheet of account- 
ing balance and knowing no royal road to eliminate the mismanage- 
ment tried to recover the losses by increasing exploitation of labor." 11 
The high ideals and honest intentions of Taylor's scientific principles 



i8o 

were only too often misused and abused to the decided disadvantage 
of labor and doubtful gains to manufacturers themselves. 

While these lines are being written, President Wilson's mediation 
commission published its finding: "The conclusion cannot be es- 
caped (sic!) that the available man power of the nation ... is 
not employed to its full capacity nor wisely directed." "Broadly 
speaking, American industry lacks a healthy basis of relationship 
between management and men. At the bottom this is due to the 
insistence by employers upon individual dealings with their men." 

Whatever might be the ultimate agreement on the controversy 
of dealing with individual employees of bargaining collectively with 
labor unions, the same fundamental antagonism of interests will 
remain as long as employers conduct their business for profit and 
employees do not participate in the control of production. 

To sum up, the immediate problem before the industry is to 
ameliorate the antagonism of interests between employers and em- 
ployees. This can be accomplished not through bargains, debating 
societies and endless "boards," but by a thorough inquiry into the 
basic facts underlying the economic and human relations. The ac- 
curate knowledge of causes and results gives the powerful and 
indisputable weapon to smash many fallacies and traditions that 
greatly harm both sides. Yet they involve no other "raison d'etre" 
than the misconception that what was true yesterday remains so 
to-day. 



Chapter VII 

MASTERING LABOR PROBLEMS 

THE most efficient machinery is of no avail unless properly oper- 
ated. In the final count it is neither perfection of equipment, 
excellence of supplies nor the best of advice that produces the best 
results but the will of the mgn^that control and operate the plant. 
Steam consumption of the most efficient turbine may be lower than 
that of a less efficient one if it is improperly loaded or run at low 
vacuum, low pressure, with saturated steam and these factors of 
course depend upon the operators. The most suitable coal in the 
best furnace and under perfect boiler may show a lower efficiency 
than poor coal and a poor boiler, if the draft is poorly adjusted, the 
firing irregular, heating surfaces dirty, etc., and all this again depends 
upon the operator. 78 

The best instructions may be available and all the facilities at 
hand to secure highly efficient results, but if the employees do not 
care to live up to them, the efficiency will remain low. In other 
words, there is little use in having a good plant and knowing how 
to operate it unless the operators are willing to do so. 

Any act of will can be analyzed according to three distinct proc- 
esses — perception, choice and action. One can not act unless the 
choice is made as to how to act (Buridan's ass) and this decision 
can not be reached unless some stimuli are stronger than others. 
The influence of heredity, training and environment affect the per- 
ception, selection, and action or in other words our will. Therefore, 
our aims and the manner in which we are pursuing them is in the 
last analysis determined by the effect that the surrounding condi- 
tions have on the individual, and modified by one's hereditary 
inclinations. 

If we admit with Laplace and Spencer the principle of sufficient 
reason in its limited sense, the logical conclusion would be the 
denial of freedom of will as every cause resolves itself into a definite 
single effect. The fallacy of such reasoning was first exposed by 
Professor A. Petrunkevitch who proved that every cause is poten- 
tially capable of producing several effects. What actually takes place, 
may only vary within definite limits, that is, within specific ampli- 

181 



l82 

tude of the case. In mathematics for instance we find many equa- 
tions which have several solutions and that the same effect may be 
produced by different causes. For instance ellipse, parabola and 
hyperbola may be derived from : 

ep 

Y — 



i—e cos A 



where r and A are polar coordinates ; similarly : 

4 = 2 + 2 = 2 2 = V16 = 5 — 1=3 + 1, etc. 

and vice versa, the same process may produce different results as 
v4 = d= 2 or several values of unknown may satisfy certain equa- 
tions. Therefore while it is indisputably true that every effect 
necessarily has a cause we must admit that, in the case of human 
will, perceptions will originate feelings and desires, though of dif- 
ferent intensity, according to the individual, and the choice between 
them will be caused by conscious decision preceded by reasoning 
which again is conditioned by heredity, educational, and social fac- 
tors. For instance, the case of offering a bonus to the workmen 
who learn the best way to perform certain work or who live 
up to instructions describing how to regulate certain process, it 
is nor a foregone conclusion that the bonus will necessarily stimulate 
all men to the expected action. 

In this case we must first consider whether the reward is attrac- 
tive enough to create the desire: a concern offering 40 cents to 
firemen for learning how to save $15.00 worth of coal failed to get 
any response from men whereas men in another plant were eager 
to learn how to save $8.00. worth of coal being offered 85 cents as 
bonus for following the instructions. It may be noted that in the 
first plant the bonus was only 10 per cent while in the second plant 
over 30 per cent of their wages for the habitual wasteful work. 

The second consideration, namely that of choice, sometimes pre- 
sents to the men a problem as to whether it is worth their while 
to strive for even an unusually attractive reward and especially so 
if there is any doubt in their mind as to honest intentions of the 
employer. It may not appear to the advantage of the men to earn 
a bonus if they are reasonably sure that after a short time the bonus 
may be discontinued and disciplinary measures substituted to enforce 
the higher grade of work which was demonstrated as possible under 
bonus incentive. Likewise in cases where the work requires physical 
exertion, a task set by an incompetent or unscrupulous man may 
be so hard as to endanger the workman's health. The choice in such 



i8 3 

a case will be negative as the dictates of reason will suppress the 
desire for extra compensation in favor of more remote benefit of 
preserved physical welfare. 

This process of choice of accepting or refusing the bonus offered, 
as caused by reasoning and natural inclinations of an individual, 
creates endless varieties in the readiness with which the men trans- 
mit their decisions into actions and the promptness or slowness, as 
well as persistence or indifferentism, with which different men learn 
and continue to perform their task. ^ 

Furthermore in considering the case of a plant where the method 
of operation is undergoing a change, and the employees are given 
an opportunity to learn an easier and better way, one should not 
forget that the acquirement 01 a new habit is a most difficult psy- 
chological process and the inducement must be necessarily not only 
strong enough to influence the decision in favor of the new order 
but also to overcome the inertia of old habits. This training and 
fixing a new habit must continue a sufficiently long time to replace 
the old habit and, what is not less important, it should create a new 
mode of thinking in substantially different terms. Like men trying 
to abstain from smoking or drinking, the men under a new mode 
of management are, in the beginning, working under a great nervous 
strain and the more gradual is the process, the more sympathetic 
and helpful is the attitude of instructors and other members of 
staff, the easier is the process of acquiring the new habit and the 
more lasting and successful are the results. What is true in this 
case regarding the manual workers is even more true when applied 
to office force and management itself for it involves more profound 
changes in their habtiual work and ways of thinking and reasoning. 

The following extract of two letters from the author's file indi- 
cates the change in the psychology of those whom the writer had the 
pleasure to help in such transition period: "I wish you could con- 
tinue these tests farther, ,, writes the station superintendent of a 
public utility plant, "for the reason that instruction to firemen during 
these tests has certainly proven to them that their way of firing 
is nothing better than ridiculous. 

"You have broken some of their bad habits . . . You have 
shown them some things that they thought were impossible, etc." 
(Figure 55 is a picture presented to the writer by the above referred 
crew at the time of parting.) 

Now, such an admission on the part of a leader requires a change 
in mentality short of being revolutionary. It is human to resent, 
and the way to accomplish the change is not by criticism but by 



i&4 

demonstration and conviction. This point is evidenced by a letter 
written and signed by the employees of another concern at the close 
of the author's engagement : 

"While here, you have not only placed the plant upon a high 
plane of efficiency, but also by your kind and helpful way and your 
diplomacy have succeeded in dispelling every vestige of the hostility 
to your methods that some of us entertained. 

"We feel that it must be a great satisfaction to you that you 
have accomplished so much, and at the same time gained the coopera- 
tion and friendship of the rank and file of the organization. It is 
significant that the workmen have been changed from doubters into 
enthusiastic bonus men." Be it said incidentally, that this plant 
was strongly unionized and our work met with the approval of the 
organization. 

The three major influences under which the man's individuality 
is shaped — are these of (1) inherited ability and peculiarities, (2) 
the effect that training and education has on their shaping and devel- 
opment and (3) the environment which not only moulds the man 
but either gives or denies the opportunity for application of his 
peculiar capabilities. The first category is beyond the direct reach 
as far as industrial administration is concerned; the second, that is 
educational equipment of members of an industrial community was 
in the past grossly neglected, the prevalent fallacy being that work- 
ingman's child needs but little schooling and only the most elementary 
education. M eagerly paid, unqualified teachers in the public schools ; 
scholastic, abstract programs that train memory for words and crys- 
tallyzed precepts instead of drilling the reasoning power for applica- 
tion to actual life and formal discipline in the class room in place 
of the moral discipline of joyous self-expression in cooperation, such 
is the mould applied to the new generation called to create life and 
pursue happiness. Obviously, what has been attained proved to be 
a failure and eleventh hour measures, such as evening classes, indus- 
trial and vocational schools, factory training courses, etc., are but 
clumsy patches on misfit and worn-out garments. Men whose brains 
are not trained for quick, precise reasoning cannot perform of their 
own accord rapid and accurate operations; they are necessarily 
clumsy, and slow, and waste their energy in useless and difficult 
manipulations. 79 

Men subject in childhood to formal, unreasoning, military dis- 
cipline necessarily lose part of their inborn initiative. A restriction 
of natural impulses imposed from outside creates, by the law of 
equality of reaction to action, a spirit of antagonism to any arbitrary 




Fig. 55. — Group of Bonus Wokers in a Central Station 

The writer received this photograph as a parting gift from the employees of 
the Perm. Central Light and Power Co. as a token of appreciation of the human 
side of the work done in connection with reorganization of managerial methods. 



order. With the faculty of analytical reasoning undeveloped, the 
protests against oppressive regime frequently assumes the forms 
of destructive excesses. 

But whatever little good the public schools might have done, is 
markedly diminished in the case of the poorest children. Parents, 
who because of low wages or low intelligence or both, fail to pro- 
vide plentiful and wholesome nourishment for their children retard 
not only their school progress but, what is more important, ruin their 
character and temperament. 50 

Whatever part the engineer and industrial leader may play in 
the reorganization of education and the training of the community, 
his word and his experience ^must carry more weight than that 
of the lawyer, preacher or candlestick maker for it is an engineer 
who is delegated to organize and direct the productive activities of 
modern society. The burden and the duty of drafting a specification 
as to what is essential and what is harmful rests with him. While 
employment managers select jobs to fit such men as are partially 
crippled by our schools and environment and engineers attempt to 
simplify and standardize operations to facilitate industrial training, 
so far the task of both has been merely corrective in its nature, 
trying to augment and ameliorate the harm previously done to the 
men seeking industrial employment. 

The third element, environment and surroundings, is no doubt 
the most pronounced one and even under the existing circumstances 
may be largely modified if only careful study of causes and effects 
is made and necessary measures are not in a radical contradiction with 
existing social-economic tendencies. Evidently, the environment con- 
tinually exercises its influence on individuals. From the broadest 
economic, legal and religious relations down to the most trivial mani- 
festations of the everyday life, the conditions of our surroundings 
help to shape our ideas, aims, prejudices, affect our temperament, 
determine our relations to men, institutions, etc., in short to define 
our conduct and bring about self -consciousness. Obviously enough, 
If a number of individuals living under similar economic conditions, 
are affected by the same legal status, and observe the same scope of 
facts and occurrences — the effect of these similar (or even identical) 
circumstances is bound to produce on all a very similar impression. 
The interpretation of the meaning and value of these common exper- 
iences cannot be much different with individuals as any given social 
group has had nearly the same sort of education and training and 
inherited individual characteristics may cause differences only in 
the degree of reaction, Hence, the psychology, morals and ideas of 



1 86 

men belonging to different social groups are different and to the 
same group similar. A negro socially isolated cannot think and act 
as a university graduate or a club man but nearly every Rotarian has 
ideas, sympathies, manners and habits like those of his fellow from 
another state. Again, class conscious workmen have more points in 
common with workmen from other parts of the world than with 
their own employer or minister of their parish. 

The engineers, who by virtue of their work, are in constant and 
close contact with both these economic classes came to realize the 
fundamental truth that, with a few single exceptions, the employers 
and employed do not speak the same language. This mutual under- 
standing was found wanting to such a degree that the leading engin- 
eering societies realized the necessity of at least making their own 
position clear. The unavoidable conclusion that directly pertains to 
our problem is that the first and most direct task of an industrial 
manager is to carefully analyze and thoroughly understand the 
economic status of working class, for on this ground indeed all other 
forms of social relations are founded. 



The Social Aspect 

The preceding brief review links together the psychologic and 
social sides of the question. One cannot be adequately understood 
without familiarity with the other and, while an industrial adminis- 
trator is constantly and most vitally concerned with the human side 
of mastery of production, he cannot avoid floundering in the field of 
mere reforms unless he clearly grasps the relations between economic 
causes and idealistic reflections. 

The Chamber of Commerce of the United States realized in its 
turn the necessity of rendering "a new service," which in their own 
wording reflects the conception that the attitude of employers must 
be supported by facts and adopted by democratic methods of adminis- 
tration which means nothing less than the condemnation of old- 
fashioned haphazard management and substituting for it one based 
on scientific certainties. 

The new service as the Chamber sees it is "to investigate all 
experiments and developments in industrial relations both in this 
country and abroad and to place before the membership the results 
of such research. To assist the constituency of the Chamber in 
bettering the relationship between employer and employee by making 
available records of the best experience and practice concerning 
wage and hours adjustment; methods of handling grievances and 



187 

discipline, industrial service (improving the working and living con- 
ditions of employees and their families, housing, medical service, 
recreation, insurance, accident prevention, etc.) ; dealing with labor 
organization; utilizing mediation and arbitration in disputes; secur- 
ing the cooperation of employees in raising standards of efficiency ; 
improving methods of employment management, hiring, transfer and 
dismissal, fitting the men to the job. 

"The permanent results of the activities of this committee will 
be educational. If successful, it will have created in the minds of 
the employers a rational attitude, supported by facts and information, 
concerning the relations between themselves and those whose inter- 
ests they are administering. The ; wage-earner is just as dependent 
upon the intelligent and successful administration of enterprise as 
is the business upon the loyal and efficient service of the employees. 
The war has given an impetus toward democratic methods of ad- 
ministration both in public and private enterprise. Industrial admin- 
istration must adapt itself to those conditions and conform to the 
prevailing ideas of the time or find itself in antagonistic relationship 
with all interests with whom it must deal. The employer must con- 
ceive himself to be a trustee of the interests of all involved in his 
enterprise and see that these interests are properly represented, lest 
he be confronted with opposition handicapping all his efforts. These 
administrative difficulties are not wholly the product of war nor will 
they disappear at the close of the war; indeed, it is more likely the 
industrial problems will increase in complexity with the coming of 

>} 81 

peace. 

One of the most remarkable things that have transpired of late 
is that the employees both in this country and abroad understand the 
economic facts and tendencies far better and clearer than most of 
the captains of industry and finance. 



The Economic Aspect 

To understand the true nature of the so-called labor problem one 
cannot avoid a brief review of the economic relations between the 
employee and the employer. While the one group of society pos- 
sesses the means necessary to carry on the production, the other 
owns nothing but the labor-power. The latter of course live only 
as long as they can sell their capacity to work and can find work 
only so long as their labor increases the capital. 82 

While a part of slave labor was obviously used to produce enough 
for their own maintenance, it appeared as if all the slave labor was 



i88 

unpaid; with a serf -peasant who worked part of the time on the 
landlord's field and the ether part of the time on his allotted farm 
this division between paid and unpaid labor was clearly separated; 
in the modern wage system the division became so obscure that a 
superficial observer is apt to form an opinion that all labor is paid. 
Manifestly it is not so. Let us take a familiar example of electrical 
energy ; to produce 10,000,000 kilowatt hours the following expenses 
were incurred: 

Operating materials (fuel, etc.) $ 36.000 

Maintenance materials (repair-renewal) 1,400 

Fixed charges and money obligations 42,600 

Distribution and selling expenses 22,500 

Total $102,500 

Gross revenue at 1.5^ per kilowatt hour (aver.).... 150,000 

Difference $ 47,500 

Inasmuch as there was no other items of expense except for labor 
the difference of $47,500 between the value realized by sale and 
enumerated cost of production is the value that mental and manual 
labor added in the process of transformation of energy. The actual 
pay-roll was, however, only $17,500. The $30,000 thus added by 
labor to the value of electrical energy sold was evidently retained 
as profit. 

In this example, the entire cost of materials and entire other 
charges reappeared in the value of power. Now, if the labor were 
paid to the full extent of the value it added to the product there 
would be no profit in the enterprise. The fact, however, is that the 
labor-power, as any other commodity is priced not by its use-value 
but by the cost of its production. The wages, therefore, are deter- 
mined by the labor-time necessary for production and reproduction 
of this labor-power. 

As in the case of electrical energy, the cost of production of 
human energy, either mental or physical is composed of three main 
groups of expenses : 

A — Means of subsistence (comparable to operating expense) 
must be sufficient to maintain the employee in his normal state, that 
is to reproduce between the working hours the energy discharged 
while working, by means accepted as standard of living. 83 

B — Reproduction of labor (parallel to maintenance and sinking 
fund) ; as men are withdrawn from the use by wear and tear and 



i8q 

death, the labor power must be continually replaced from the ranks 
of new generation; sufficient means therefore, must be provided to 
raise and bring up the children. 

C — In order that the employee may acquire necessary skill in 
a given branch of industry, a special education and training is re- 
quired (similar to fixed charges and administration) and means must 
be provided to cover the expenses of education and accumulation 
of experience. Certain margin must also be provided to cover in- 
dividual's duties toward the state, society and insurance of one kind 
or another. 

Inasmuch as time for production of labor-power is the chief 
determining element, it is obvious^that the employers of wage-earners 
insisted on buying time. If they had to buy the quantity of brain 
or muscle energy or result of their work, the difference between the 
cost of labor-power and its use-value would vanish and profit from 
the employment would disappear. 



The Basis of Wages 

Having this point clearly in mind let us glance at special forms 
of compensating labor. When wage-earners realize that all they are 
getting is the cost of production of their labor-power they bend 
their efforts on getting their price in a minimum time. While less 
than a hundred years ago even children had to work in England 
sixteen hours a day, the pressure on legislators as well as realization 
by employers that the less overworked men can produce more and 
do better work, cut the working day almost in two. The employers, 
on their part, while yielding to reduction of working hours, attempted 
to increase the productivity of labor per hour so as to offset the 
loss in time. The piece-rate payment was introduced with that end 
in view, but since men are not created equal in their capacity for 
work some succeeded in earning far in excess of what was consid- 
ered sufficient for the existing standard of living. Hence, the retro- 
grading and leveling process of cutting down the piece rates to the 
figure of the average daily wages was resorted to and in this way the 
most vigorous and skilled men were lowered nearly to the old 
amount of earnings, though for a larger output, while the less skilled 
or physically weaker were reduced to starvation wages. The natural 
consequence was a conscious limitation of productivity of labor. 

In the field of power production the day-pay reigned exclusively 
because there was no convenient piece rate which could be used to 
rate engineers or firemen. At the same time in this industry, clearer 



190 

than in any other, it can be observed that the use-value of labor was 
never considered as a basis for determining the wages. Let us take 
a case of two firemen, one generating 1,000 pounds of steam with 
100 pounds of coal and another with 150 pounds of the same coal 
in the same boiler. The first fireman thus consumes eight tons 
worth forty dollars, while the second uses twelve tons worth sixty 
dollars and yet both produce the same amount of steam; the first 
fireman, if paid according to the value of his work should get twenty- 
four dollars per day and the second only four dollars per day. It 
is common practice however to pay both the same amount. 

In the light of the preceding analysis the wage question appears 
as a definite problem capable of solution, while the measure advo- 
cated by extremists offer no solution but dismiss the question alto- 
gether! As soon as workers get the full value of their labor, the 
wage question ceases to exist, but so does that of profits. So long 
however, as private ownership and capitalistic regime continue in 
force, the wages represent only a part of the value added to the 
product by the labor, the other part remaining in the hands of em- 
ployers as profits. Formulated by Abraham Lincoln in his speech 
of 1847 : "To secure to each laborer the whole product of his labor, 
or as nearly as possible, is a worthy object of any good government." 
The first step in this direction is obviously the establishment of the 
minimum wage scale. 

The predominating method of establishing a wage-rate is often 
erroneously called a "free bargain." It lacked however the element 
of freedom on the part of workmen to refuse unsatisfactory offers 
and it thus took a form of vulgar exploitation. As a French writer 
of 1773 puts it, the bargain substantially was carried thus : "Wherever 
there are large establishments and consequently many day laborers, 
this is how the (day-rate) wages are naturally established: the 
workman asks a certain amount, the proprietor proposed a lesser 
one ; and when he adds 7 can get along without you for many days; 
let us see whether you can stay without me for twenty- four hours/ 
then it is clear that the deal is soon closed at a disadvantage to the 
workman." 

Three years after, Adam Smith remarked that "in the long run 
the workman may be as necessary to his master as his master is to 
him, but the necessity is not so immediate" 8 * or as the Federalist 
puts it 88 : "power over a man's subsistence amounts to a power 
over his will." Small wonder, therefore, that the individual bargain 
of necessity gradually gave way to collective bargaining and that 
labor union; trade unions, and other labor organizations, demanded 



191 

the recognition of their right to exercise their skill and power to 
offset the disadvantage in which an individual worker finds himself 
facing in the bargain a cunning, experienced foreman, manager or 
employer who, besides, "can wait." 

This right of collective bargaining, gradually being granted by 
all civilized states, opens two other questions inseparable from it — 
the standard rate and the right to a job. The standard rate is only 
a minimum, never a maximum. In British unionist practice, where 
the idea was originated, it merely means that the member agrees not 
to accept less than a certain rate of pay. A large majority of British 
unions insist on piecework 86 and all the violent criticism that the 
"standard rate" means "setting a premium on idleness and incapa- 
city," and that it is the "worst kind of communism," etc., was evi- 
dently based on misapprehension that the "standard rate" being the 
rate of payment does not fix the actual amount of earning. Men of 
superior skill, even in trades insisting on time work, can give and 
receive advantage of their capacity and ability by getting jobs that 
are paid from 10 to 50 per cent above the standard. Furnace build- 
ing for masons, may be a good example. Similarly in this country 
we find industrial establishments and power plants which for the 
purpose of maintaining the highest grade of personnel and, therefore, 
better standard of production are regularly offering higher wage 
rates than the union minimum, and with full consent of labor unions 
involved. We know boiler houses in Massachusetts and New Jersey 
for example that pay the firemen from 6 to 28 per cent more than 
the union scale demands. 

Considering" now at what level this standard rate should be 
fixed, we must recall our analysis of the three elements consti- 
tuting the wage as time rate for production and reproduction 
of labor power. It is not necessary to elaborate here on the sub- 
ject. Suffice it to remember only that such investigations as 
were carried by the United States Chamber of Commerce, 
Federal Trade Commission, War Labor Board and many other 
institutions and individuals , were unanimous in the assertion 
that a very large portion of industrial undertakings have such 
inadequate methods of cost finding that they actually do not 
know what the production cost them. Obviously all the agree- 
ments that may be advanced by such concerns as to what they 
can or cannot pay for labor are utterly without foundation and 
must not be seriously considered. On the other hand, labor as 
the opposing party, does not possess any accurate data showing 
what is the value added by labor to the product. Nevertheless 



192 

informations of both kinds are easily obtainable and may readily 
be calculated. If such labor value accounting be practiced broad- 
cast it would furnish the two limits within which all the indus- 
trial disputes of wages may be adjusted. If the value added by 
labor to the product be $47,500 and the actual total wages paid 
in $17,500, then we know the amplitude within which the ad- 
justments may be made. As long however as owners maintain 
the policy of secret and inadequate cost keeping, the hit-and- 
miss method will prevail, and be accompanied by a considerable 
bitterness in disputes as the room for mistrust and exaggerated 
suspicions is virtually boundless. The method largely in vogue, 
as a consequence of this lack of confidence and absence of 
knowledge, is that of determining a minimum (or average) cost 
of living for a trade, under accepted conditions, time and 
place. Any agreement reached on such a basis is individually 
unsatisfactory inasmuch as it is based on an average, and so- 
cially harmful as it necessarily retards the advance in wages 
until after the cost of living has already increased. The two 
outstanding results, well known to all, are first a lowering of 
the physical and intellectual standard of the nation 8T and second, 
a decrease in productivity of labor. Professor A. Marshall ob- 
served this fact some twenty years ago and summed it thus. 88 

"We may conclude in opposition to the older economists, 
(W. N. P.) that any change in the distribution of wealth which 
gives more to the wage-receivers and less to the capitalists is 
likely, other things being equal, to hasten the increase of ma- 
terial production, and that it will not perceptibly retard the 
storing up of material wealth." Since this has been written 
the work of notable engineers in industrial administration proved 
in cases of thousands of plants that low wages and high efficiency 
are never met in reality while increase in wages is coincident 
with increased productivity or improved quality of work. The 
leading English trade unionist gives an interesting resume, link- 
ing together both sides of the question: "Considering, therefore, 
. . . that an increase of wages is likely positively to increase 
that highly productive form of the nation's capital — the physical 
strength and mental training of the manual working class; that 
the middle class is mainly bent on securing permanent incomes 
for future maintenance, and will therefore be induced to work 
no longer and harder, and save more, the lower the rate of inter- 
est descends ; that a low rate of interest both stimulates inven- 
tions and promotes their general adoption; and that municipal 



193 

and national enterprise, if favoured by a low rate of interest, 
grows by leaps and bounds, economists are beginning to assert 
that a rise of wages at the expense of profit would probably 
result, not in less, but actually in more being produced, and tak- 
ing all forms of national wealth into account, that it might be 
expected positively to increase the productive capital of the 
community in one form or another." Let it be said in passing 
that, as applied to the power industry of this country, the chances 
of the necessity of reducing the rate of interest are infinitely re- 
mote, so long as the amount of preventable waste, particularly 
these due to poor methods of operation and management, are 
still many times larger than^tKe present cumulative payroll. 
We do not need to dwell on this subject of standard rate any 
longer; for our purpose it suffice to note that (1) it means 
rate not total earning, (2) so long as wage system remains in 
force it is possible on the basis of accurate knowledge of "value 
added by labor" to determine the limits for its adjustment (3) 
that it is to the advantage of the industry and of the nation to 
fix the standard rate at the highest practicable point, but (4) 
inasmuch as standard rate is merely a rate (per hour or per 
piece) and the other factors may not be definitely determined 
(overtime, special skill, unusual physique, etc.), the standard 
rate should be accepted only as a basis or guaranteed minimum 
rate of earning while a secondary rate shall be applied over and 
above this primary rate. This will be discussed later under the 
heading Two Rate Wages. 



Incentive Payments 

A variety of schemes and plans have been proposed and tried 
by different authors with the end in view of establishing an ade- 
quate basis for labor compensation and a stimulation for higher 
quality work. Before we briefly review them one point of great 
importance should be clearly established: in the production of 
power the quantity of the plant's output is independent from 
the worker and therefore the incentive may in general be based 
only upon the quality of the work. The success or failure of any 
such attempt depends therefore upon the recognition of this 
principle and the method of measuring the quality. 8 * 

It has been an invariable experience of all concerns attempt- 
ing to base an incentive for more or for better work either on 
factors independent from the employees or on arbitrary and 



194 

loosely established methods of measurement, that the results 
were either short lived or unsuccessful from the start. As long 
as we admit the fact of inequality of skill and corresponding 
inequality of value of labor we are facing a new problem. Should 
the labor power or superior skill be permanently rated at a 
higher figure or should it vary as this skill makes itself manifest ? 
Obviously the question in this form confuses two distinct propo- 
sitions. In every trade and at any time there is a certain ac- 
cepted average skill qualifying the man to do his work. In this 
sense the difference between the values of labor-power of a 
window cleaner and fireman is permanent. Opposed to that 
we observe a difference between two window cleaners ; one, of 
superior skill, can wash equally well three times as much glass 
surface as another and yet consume no more time or supplies. 
Again, one fireman, due to his superior skill in selecting, and 
maintaining the more favorable conditions, can produce the same 
amount of steam of the same quality and pressure with less fuel 
than another. The moment we pay both men the same wages, 
we underpay the man of superior skill. Should we then decide 
to increase his rate according to his additional dexterity, we pay 
not for what we receive but merely for what he possesses. In 
other words, whereas difference in value of labor engaged in 
different occupations remains permanent, as long as there is a 
difference in general requirement of the work, the difference based 
on the degree of skill, in the same occupation, is manifest only 
when actually exercised. 

The inevitable conclusion thus arrived at is that any degree 
of skill above the average in a given trade or occupation must be 
actually measured each time as it applied. The price paid for 
such surplus skill is the bonus or secondary wage rate, paid over 
and above the wage rate accepted for the labor power in the 
given trade or occupation. 

To assist the employees to acquire the highest possible de- 
gree of skill, as it will be shown later, is a specific function of 
management. Those who acquire the skill and the habit of ap- 
plying 90 it to their work are entitled to an extra payment which 
thus appears as a reward to those who learn, while it is really 
nothing else but the value of additional service rendered. It is 
appropriate at this juncture to note the fact that if the expenses 
of acquiring this additional skill (comparable to the revenue 
producing investment) are shared by the employer providing 
for the training and education of the employees, his claim for 



195 

a share of added value of labor is warranted, while in the case 
of a simple request of doing more or better work without actually 
assisting the men to that end, employers claims are question- 
able. The men usually realize this distinction very clearly and 
similar ways of reasoning are often heard among those wielding 
shovels and a thorough training and full cooperation on the part 
of management offers the strongest argumentation in favor of 
adequate and correctly established method of bonus payment. " 

The antiquated, unscientific way of thinking is responsible 
for the misconception on the subject of wages common to many 
employers and labor organizations. While some economists 
obstinately insisted that the profit is not due to the difference 
between the value of the labor ^and its price as a commodity but 
to some miraculous process of autogeneration of capital, some 
labor organizations, protecting the minimum wage scale, raise 
all kinds of objections against higher pay to more skilled mem- 
bers. The "equal pay" error however shall have no place in 
the industry based on wage-system. As we have shown before, 
the right of the producers is proportionate to the amount and 
quality of work they furnish; the equality therefore consists in 
that the labor is measured by an equal standard. 

The special feature of the two-rate payment will be dealt 
with at length later, suffice it to say now that while this method 
of payment for services rendered has a basis a guaranteed 
amount (at least equal to the accepted standard daily wage 
or minimum wage rate), insuring the adequate living expenses, 
the supplementary payment is commensurate to the value of the 
services rendered. This principle establishes equality as far as 
the bonus is measured by a definitely established task. Moreover, 
in power houses there is no room for objection to "speeding up," 
"undermining the health," etc., for the simple reason that better 
work or higher efficiency is attained only when the amount of 
physical work is reduced. In other words, higher efficiency of 
firemen means less coal handled and burned for the same output, 
less ashes removed, etc. Higher efficiency of engineers or switch- 
board operators means merely closer attention to the instru- 
ment showing the distribution of load, vacuum, etc., resulting 
in smaller steam consumption. Higher efficiency of mainten- 
ance men similarly means reduced work under strenuous condi- 
tions of emergency repair which is displaced by preplanned in- 
spections, scheduled overhauling, etc. These principles clearly 
established, it is comparatively easy to trace the typical fallacies 



196 

prevalent in the various modes of paying to the power plant em- 
ployees and in the variously called additions to their regular 
wages. 

Practically all of these methods were devised to stimulate 
the employees to do better work and to relieve the management 
of the responsibility for training and guiding the men. The im- 
proper methods unfortunately are used often enough to dis- 
credit the correct underlying principles in the eyes of those who 
do not care to study the question in its entirety, be it owners, 
managers, or the laboring men. For the sake of simplicity all 
these plans, as practiced in the power plant work, may be classi- 
fied into four principal groups : 

1 Profit sharing 

2 Premium plans 

3 Rewarding individual efforts 

4 Two-rate wages. 

Profit Sharing 

Profit sharing and co-partnership of labor with capital was 
perhaps the oldest attempt to secure the workmen's consent for 
higher prices and profits. It received favorable attention from 
philanthropists and social reformers and in 1892 there was 
formed in this country the Association for the Promotion of 
Profit Sharing ; in France a similar society was organized in 1879 
under the name Societe pour l'Etude de la Participation aux 
Benefices. The British Board of Trade defines these as follows: 
"profit sharing is understood to involve an agreement between 
an employer and his work people under which the latter receive, 
in addition to their wages, a share fixed beforehand, in the profits 
of the undertaking." n 

There are, however, many varieties of the scheme that can- 
not be fully covered by this definition ; for instance under 
Youngstown Sheet and Tube Company's plan the percentage 
of bonus to wages was not announced in advance but remained 
entirely at the company's discretion. This plan was abandoned 
after the violent labor outbreaks experienced by this corporation 
in 1916. 92 The head of another profit sharing concern writes : 
"On January 1st of each year our profits are distributed, and 
wages adjusted. On that day we consider the question of the 
wages of employees. Any who insist on securing an advance in 



197 

salary are dropped from the profit sharing list/' (The italics are 
ours.) The president of another corporation expressed himself 
thus : "My idea is to pay men as regular wages an amount slight- 
ly less than the actual value of their services, and then to make 
an additional payment to them, dependent in amount upon the 
success of the business. . . ." 

Again, some, like the A. W. Burritt Company, of Bridge- 
port, Conn., cause men to lose "coming and going." Mr. Bur- 
ritt, the treasurer of the company, states in his book on profit 
sharing that "for the purpose of providing a fund from which 
to meet losses, ten per cent of the wages of participating em- 
ployees is deducted from the weekly pay envelope." Again, as 
in the cases of the Ford Company and a contracting firm in Ohio, 
the profit sharing is applied only to "such employees as may 
be deemed worthy by the Board of Directors." 

Like all paternalistic, arbitrary measures emanating from "above," 
whether prompted by charitable and "humanitarian" motives or, as 
it is more frequently, by business considerations such profit sharing 
plans are bound to be distasteful to organized and conscious labor. 
The cardinal objection is against the demoralizing effect of either 
"charity" or "bribe," as the case might be, concealed in such sharing 
of spoils. Both are calculated to shade off the real relations and 
tame labor to eat from the hand and then kiss it. From the 
stand taken on the subject by the Federalist and some of the trade 
union leaders there could be no resentment expected to any supple- 
ment to the wages after the standard wage scale, approved by union 
as has been secured, hours and conditions of work regulated, etc., 
but, the distribution of stock or cash-profits is usually connected 
with so many discriminations, conditions, and even compulsions, that 
there is always present in the workman's mind a fear that these 
schemes are calculated not only to make him, in anticipation of his 
possible share of profit, more docile and tolerable to the conditions 
otherwise unbearable, but moreover, to enslave him by compulsory 
application of his money to real estate, shares, etc. Again, the ad- 
vocates of profit-sharing schemes themselves admit that these plans 
are introduced for the purpose of ( 1 ) cutting down standard wages, 
(2) of discouraging demands and preventing strikes, and (3) of 
preventing the employees from accepting better employment 
elsewhere after his money are tied up with a concern. Moreover, 
paternalistic profit sharing not infrequently makes the distribu- 
tion of shares subject to examination of family relations, private 



198 

mode of living, moral character, etc., thus depriving some of the 
employees of their last vestige of self-respect and independence. 

The practitioners of profit sharing themselves do not believe "that 
in groups of large size it will normally operate as a strong incentive 
to personal efficiency, increased effort, care, economies or coopera- 
tion." M They even go as far as to admit that "this aim can be 
reached much more directly, simply and surely by putting the addi- 
tional amounts in the regular pay envelope." " 

How then can profit-sharing promote industrial peace and effi- 
ciency? The advocates of these plans give answer: "freedom from 
strikes should rest upon (1) fair wages, (2) good conditions of 
employment, (3) considerate treatment, (4) deserved loyalty, and 
(5) recognition of efficient service." 98 Looking over these five con- 
ditions we fail to see any connection between them and the princi- 
ples of profit sharing; indeed any labor organization may accept 
these conditions for its own platform and the truth is that the truth 
is not told. 

The application of profit-sharing schemes in the power industry, 
after this general review, presents to us a specific interest. The 
Brooklyn Edison Illuminating Company pays a "wage dividend" 
which is a percentage upon the employees annual earnings, varying 
directly with the rate of dividends paid upon capital stock for the 
year, and with the employee's length of service. These dividends are 
credited toward the purchase of the company's stock. Of the gas 
companies using profit-sharing plans in the United States we know 
of New Haven Gas Light Company, the Boston Consolidated Gas 
Company, and the Grand Rapids Gas Light Company. The first 
mentioned concern like the Brooklyn Edison Illuminating Company 
credits quarterly wage dividends to an employee until the amount is 
equal to a share; the certificate is then issued to him. The second 
concern actually pays the share of profit on the same rate as upon 
shares. The last mentioned company uses "sliding" scale, similar 
to the one in operation by South Metropolitan Gas Company of 
England, under which the rates increases with the decrease of the 
price of gas. In 1915 less than 6 per cent of the shares were held 
by profit-sharers, thus indicating that the whole plan is bordering 
on a myth. 

It is interesting to note that the use of profit-sharing instead 
of bonus in power industry is made because of alleged "difficulty 
or impossibility" of measuring the tasks of stokers, enginemen, gas 
fitters, meter readers, etc., the experiences of the author and of 
other engineers, notwithstanding. The conclusion therefore cannot 



199 

be escaped that unfamiliarity of management with the managerial 
tasks and the development of the science and art is more likely to 
be the cause. 

Researches made by the United States Labor Department and 
by private investigators show one more instructive peculiarity of 
these schemes. Nearly all establishments once adopting profit-shar- 
ing abandon it in a very short time, the exception being the cases 
in which the profit sharers are not the producers but officers or the 
salaried employees. The explanation of this fact is obvious and 
illustrates an utter futility of expectation that profit-sharing may 
unite the interests of employed and their employers. Profit sharing, 
being based on the rate of profit, depends upon the success of busi- 
ness transactions, not on efficiency of workmen alone. Indeed, the 
management buying unsuitable or expensive materials, hiring low- 
paid labor, increasing over-head expenses, etc., may wipe out all the 
economies that employees could effect. Moreover, increasing profits 
one way or another, indicates that the commodity (power or gas) 
is sold not only at a price which is higher than the cost but that this 
difference is increased. In other words, such success means increased 
cost of living (or at least not reduced) while the increase of wages 
represent only a percentage of this increase. Thus the profit sharing 
is based on an economically unsound principle. Evidently those 
employees whose duty is to secure larger profits may feel that the 
share of profits is theirs by right while those whose function it is 
to produce the goods, resent it as it is more to their advantage to 
see the prices go down than the profits to go up. 

Broadly speaking, while any plan to give the employees the 
privilege of sharing the company's profits aims at instilling the 
spirit of unity of interests of employer and employed, it fails be- 
cause this privilege is not conditioned by responsibility of jointly 
managing the affairs of the enterprise. So long as the form of direct- 
ing and controlling the affairs of the enterprise remain autocratic, 
even though it may be benevolent and paternalistic, the employees 
clearly realize their inability to participate materially in securing the 
success of the enterprise and to render service to the community. 
Such mutuality of interests could rightfully be expected if the em- 
ployees had the opportunity to control all functions of management, 
fix the salaries of directors, direct purchases, investments, sales and 
generally have a hand in all financial transactions. But then the 
organization would become cartel or cooperative and the "profit shar- 
ing" will lose its identity, workmen would receive full value of their 
labor and not merely share it with employers. 



200 



As long as they are expected, however, to work under the condi- 
tions provided by the management, serving the interests of the 
owners, using the equipment and materials furnished by the em- 
ployers, who in turn disposes of the product, and carries out all 
outside negotiations without the counsel and consent of the employee, 
the profit and loss of the enterprise is influenced only in a very 
slight degree by the excellence of the work done by the men. If 
for any reason whatever dividends are not declared, the workmen 
lose their share, perhaps through no fault of their own, since even 
if they have been working as well as possible, blunders in policy 
and mismanagement, overequipment, idle charges, stock gambling 
and what not, could easily offset any advantage of the splendid 
efforts of the men. 

Nevertheless there are instances on record showing both financial 
success and freedom of internal friction in the companies adopting 
profit sharing plans of compensating employees. These however are 
easily traced to the more direct and unquestionable value of higher 
wage scale and more sincere interest in the well being of the em- 
ployees, and not to profit sharing proper. In fact there is a much 
larger number of cases on record where the profit sharing plan 
unaccompanied by guaranteed high pay and welfare work caused 
endless troubles, discontent and even strikes. Particularly unfor- 
tunate experience in this respect were had by companies forcing 
their employees to invest their share of profits into shares, real 
estate, etc. In all cases, however, the profit, being not necessarily 
the result of good work of men, has little to do with direct stimula- 
tion for learning the best way of doing the work and acquiring the 
habits of industry. 

Premium Plans 

The first attempt conducted on a large scale in this country to 
secure operating economies in power plants was made about fifteen 
years ago on the Atchison, Topeka and Santa Fe Railraod. The 
primitive method used is of interest chiefly by way of contrast with 
the development in the art. It was recognized that : 

1 The actual performance was worse than the possible 

2 Local conditions of various plants call for different standards. 

The work of establishing standards of performance was based 
not on actual experiments, but on average statistical data of the 
past, reduced by the guessed percentage suspected as waste. Then 
an allotment was made for each individual plant as to how much 



201 



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Fig. 56. — Steam and Coal Consumption per Pound of Cloth Bleached 



Attempts to judge the quality of work of firemen by mixing it with variable 
factor of how steam is used in process is an absurd misconception. In this case 
steam consumption per pound of cloth was reduced 19.8% while coal consumption 
was reduced 2 1 .9%. In fact the steam production per one pound of coal increased 
2.86%. 



202 

fuel should reasonably be consumed there per month. Similarly 
pay-rolls were revised and certain labor costs were assumed as rea- 
sonable. These two records multiplied by constants arbitrarily set 
(six for fuel and four for labor) added together and divided by 
ten give the figure of merit used as a basis for payment of bonus, 
the bonus itself being adjusted on a sliding scale. The shortcom- 
ings of this crude method are apparent: 

1 Men were left to discover for themselves how to secure 

the results desired by the management 

2 The management, shifting the responsibility to the men, was 

itself uncertain as to the exact amount of saving accom- 
plishable due to individual efforts, and therefore could not 
fix a definite bonus. 

The results accomplished by the Santa Fe men were, however, suffi- 
ciently satisfactory to the railroad so that not burdening itself with 
further responsibilities, the management still maintains this method.** 

Numerous other attempts were made by other concerns pro- 
ducing power, either for their own use or for sale, to organize the 
management along lines more definite than a mere request "to do 
better." Inasmuch as the largest portion of power operating expense 
is for fuel, the first efforts to secure economy were made in the 
boiler plants. 

The resemblance to profit sharing is manifest in the Edison 
and Lewis "premium" schemes for power plant force based on the 
ultimate cost of power. A number of years ago a Portland cement 
company put the firemen, mostly skilled, industrious Portuguese on 
a "premium" plan whereby their work was judged by the cost of 
steam generated and premium offered for its reduction. To no 
surprise on our part, the scheme proved to be a failure and was 
abandoned, chiefly upon insistence of the men themselves who clearly 
conceived what the inventor failed to see. The common error of 
all premium plans is that the financial result or cost of operation is 
taken as a basis for award or denial of the premium. It fails in 
this way to take due cognizance of the fact that the cost is 
affected by : 

1 Price of materials used 

2 Quality of materials used 

3 Maintenance of equipment 

4 Load characteristic 

5 Volume of output 

6 Managerial methods. 



203 

Obviously the first five factors are not under the control of the 
firemen, engineers, laborers or switchboard operators, and even the 
plant superintendent seldom has full charge of these conditions, 
therefore any attempt to judge the work of operating men from the 
viewpoint of costs is a shortsighted placing of responsibility where 
it does not belong. Furthermore, wherever only operating factors 
are taken into consideration, the determination of premiums for the 
entire personnel does not differentiate among shifts, crews or men; 
yet it is quite evident that the extent to which different employees 
contribute to the attainment of economical results is very unequal. 
While firemen can cause as much as a 50 per cent fluctuation of fuel 
consumption per unit of outputs/all the rest of the power plant 
employees could influence the operating cost but slightly. 

A similar misconception caused by insufficient familiarity with 
facts is manifest in a recent application of a premium plan to a 
bleachery plant by Mr. Lewis. Fixing premiums on the basis of 
power consumed per unit of manufactured output means working 
on the wrong premises inasmuch as the perfection of power genera- 
tion is thus inseparably mixed with the efficiency of: 

1 Power distribution 

2 Manufacturing equipment 

3 Bleaching processes 

4 Kinds of goods handled 

5 Amount of finished goods. 

Figure 56 illustrates an actual case from our practice of steam 
and coal consumption per pound of cloth bleached. The reduction 
observed does not in any way reflect on the efficiency of the boiler 
room operation and there can be no reason why the firemen should 
receive a premium if the saving is due to the improvements in dis- 
tribution and use of steam, stopping the leaks, etc., nor to lose it, 
because the bleach house foreman does poor work. Such short-cuts 
largely contribute to bringing into disrepute the schemes of paying 
premiums without analysing the responsibility for the contributing 
factors. Similar method has been practiced by the T. M. E. R. & 
L. Co., of Milwaukee, Wis. The commendable feature of all these 
efforts is not however in themselves but in the fact that more than 
the usual amount of attention is paid to both operating and man- 
agerial problems. The deplorable part of this premium, or as they 
call it "bonus," plan is the inseparable confusion of records and 
bonuses of various employees — individually and by groups. The 
result is that while firemen and maintenance men may do excep- 



204 

tionally meritorious work, reaching very high efficiency, the in- 
attentiveness of an engineer may raise the steam consumption. Yet, 
instead of allocating this responsibility, the good and bad work is 
thrown in one pot, mixed, stirred up and, if the plant's average is 
below the mark all lose the bonus, good workers as well as negligent 
ones. The company calls it "all for one, one for all" while to us 
it looks like Sodom and Gomorrah being punished for one sinner 
instead of one Lot spared. Economically the results reported were 
meager. Under this plan, during the best year on record employees 
earned only about 7.5 per cent as bonus over the regular wages. 85 

Rewarding Individual Efforts 

The principle of rewarding men for their efforts in securing 
operating economy and improving methods, while sometimes bring- 
ing about a measure of improvement, cannot and never does accom- 
plish in full measure the elimination of preventable wastes. Such 
failure is primarily due to the "gentleman's understanding" that the 
firemen and coal passers know more about science and practice of 
economical operation than the engineering staff and the management. 
When the men are simply told (f to do better" and left alone to strug- 
gle and solve the problem, in order to receive a promised reward, 
it is a sign of weakness of the administration, a case when the man- 
agement fails to manage. 

Another reason why this plan fails to produce better results 
lays in the fact that although the management shifts the responsi- 
bility for securing better results on the men, it does not likewise 
give the necessary authority to adjust and control all influential 
factors. Men cannot alter the conditions under which they are 
expected to produce results. Men seldom have sufficient power 
of reasoning for detecting the harmful causes. Men never have 
enough time and facilities to analyze, plan and adjust the conditions 
the way they should be, and if they can and do, then the nominal 
management becomes simply an ornamental adjunct of the organiza- 
tion. 

The previously cited Santa-Fe bonus has all the ear-marks of 
the method of rewarding individual efforts. More recent attempts 
are exemplified by O'Neill's method 96 and the practice of the Manilla 
Electric Company. 97 The most frequent error however in the applica- 
tion of this reward system is in the arbitrary selection of one or 
more isolated factors, like high CO2 in the flue gas, low carbon 
content in ashes and so forth, and rewarding men for obtaining these 



205 

fragmentary results. The interrelation of plurality of factors is for 
simplicity's sake overlooked and the final results are frequently 
more unsatisfactory than before. 

In the author's paper on Bonus for Firemen 98 he maintained that 
"if one of the advocates of these short cuts would take pains to 
investigate any of his hobbies, whether high COa or low flue tem- 
perature or good ashes, or anything else that can be studied, he 
would find that the complexity of influential factors is sufficient to 
warrant a long step toward detail study." Five years later Power 
published an article describing Mr. H. O'Neill's method of deter- 
mining bonuses for boiler plant operatives based on the com- 
bination of the three above mentioned factors. Some day, we hope, 
another revelation will be made announcing that "something else" 
is to be taken into consideration. The pathos of this plan however 
is reached with the announcement that "the division of the bonuses 
to individual men is left to the judgment of the management." A 
truly frank admission that the management is not based on the 
facts but on opinions and does not know how to measure accurately 
the contributing effect of the work of firemen, cleaners, repair-men, 
etc. 

A step forward in this direction has been made at the Manilla 
Railway and Light Company's plant where the proportion of bonus 
received by each "varies with their responsibility or the degree in 
which their duties offer an opportunity to save coal." Whether the 
opportunity was actually exercised, remains however uncertain. In 
accordance with Blaisdell's plan a water tender receives 10 points, 
a fireman 6 points, an oiler or coal passer 3 points, etc., but, similarly 
to the Santa Fe case, there is no definite reason why such an arbi- 
trary favoritism should not be challenged. While Blaisdell's method 
is based on the most unfit principle of dumping without analysis all 
causes and all individuals reckoning the efficiency of all -stages of 
the process of power transformation and generation in the final 
terms of thermal efficiency (number of B. t. u. per kilowatt hour 
on switchboard) and finally apportioning the spoils of this battle 
royal for efficiency at fanciful ratios, there is still another factor 
deserving a mention. The competition among the members of a 
"watch" is not encouraged because of impossibility created by the 
tact that only the final all-around efficiency is measured. But the 
rivalry between the three "watches" is fostered to the extent that 
the best gang takes away from the others ten per cent of their bonuses. 
This forfeiture of earned bonuses discloses another dangerous weak- 
ness of the entire plan. If one gang has accomplished results en- 



206 

titling it to a deserved reward, so does the other gang that exceeds 
the requirements. If however, certain results should entitle men 
to a higher reward than some others, the gradation of rewards ac- 
cording to results should be fixed permanently. As it is, the same 
quality of work fetches different compensation not only in comparison 
with another gang, but the same quality of work of the same men 
may fetch different rewards on different days. In other words, if 
a value of a "good" work is depreciated by comparison with the 
"better" work, it means that the whole system lacks clear concep- 
tion as to what constitutes the task and what it is worth." 



Two-Rate Wages 

About ten years ago the author published some data from his 
experiences with payment of two-rate wages in connection with 
accurate measurement of the quality of work done in the power 
houses. It attracted an unusual amount of attention and favorable 
comments from most diverse quarters and the method became known, 
in parallel with practices in other industries, as task work with 
bonus, although special peculiarities of power industry, substitution 
of quality requirement for this of quantity for a task, payment inde- 
pendent of the time in which the task was fulfilled and number of 
other dissimilarities made the name ill-adapted and non-descriptive 
of the fundamental principles involved. Substantially the original 
plan was described thus : 

The well-known falling short of test results in every day per- 
formance can be eliminated or at least greatly reduced and uni- 
formly high efficiency obtained in regular service. In order that the 
favorable conditions be maintained and the desired results of high 
economy of operation be accomplished not spasmodically, but day in 
and day out, the task based on quality ought to be possible and 
desirable. 

The possibility of accomplishment of task is governed by (1) 
proper coordination of conditions and supplies with power demand 
and existing facilities; (2) proper assistance to men in their work; 
and (3) proper balance of strain during the work and regain of 
physical losses of the individual during intervals between working 
periods. It complements the common method of time studies, with 
a new method of physical studies of the effect of work on the health 
of workingmen and a method of scientific determination of length 
of working day. 

The desirability of accomplishment of a task set within men's 



207 

possibilities requires the study of (1) physical stimuli, (2) psychical 
stimuli, and (3) social stimuli. To the first group is referred extra 
payment, better surroundings, shorter hours, sanitary conditions, 
etc. To the second group factors like sporting spirit, confidence in 



"o 4 

o n 



§3 



u 

CD ' 






^ 
^O 



Nf<* 






PRIMARY RATE 



\ 



PREVIOUS DAY RATE 



SECONDARY RATE 



V 



20 



19 



18 



17 



16 



15 



23 8 



22 



CO 

o 
o 
o 



21 ^ 



C5 
O 

t 
o 

TS 
4) 
iD 
C5 

CD 



o> 



13 



IE 



50 55 60 65. 70 75 80 

Boiler and Grate Efficiency 



85 



c 
IS. 



c 

iO 






to 
o 



Fig. 57. — Relation between Secondary Rate of Wages and Cost of 

Production 

In a given plant, the task was set to attain 70% boiler and grate efficiency. 
For the work below this standard firemen were to receive $4.00 per day, and the 
cost of fuel per thousand pounds of steam was 15.3c. or more. When the task is 
accomplished, a secondary rate, equal to 10 c. per hour, was paid over and above 
the primary rate. The cost of fuel per thousand pounds of steam under this 
condition is below 15.3c. (Cost and wages on this chart are on pre-war basis.) 



records, relationship with management, desire to study and advance, 
etc., and to the last group belong such stimuli (favorable or not) 
as attitude of fellow workmen, of trade unions, of members of 
the family, and condition of labor market, legal regulations, etc. 



208 

Reviewing the present status of the incentive and bonus payments 
before the convention of delegates of the National Association of 
Stationary Engineers in 1919 at Huntingdon, W. Va., the author 
presented for the consideration of that representative and influential 
body a plan, as practiced by him for a number of years and called 
the two-rate wage. This plan received a most hearty approval as 
was indicated by the unanimous vote that a pamphlet on the subject 
be published by the National Association of Stationary Engineers 
for distribution among power-plant owners. 

The features distinguishing the two-rate wage payment from 
any other form of compensation or wages are based on two funda- 
mental conceptions : 

1 Guarantees to every member of the organization rendering 

specially valuable service, a reward proportional to the 
service rendered 

2 Service to the community, understood as responsibility to 

run industry democratically and efficiently, thus rendering 
socially necessary service with minimum waste of any kind. 

From this a practical plan is evolved that : 

1 Guarantees to every member of the organization rendering 

useful service a standard compensation (primary rate) 
sufficient for maintaining a decent and comfortable mode 
of living and that 

2 Offers an opportunity to secure extra reward for valuable 

service resulting in elimination of industrial waste in the 
form of additional wage (secondary rate) and an advance- 
ment to a position of a leader helping to further the socially 
valuable, efficient service. 

The economic consequence of this method may be well presented 
in this chain of sequences : 

1 Increased earning (secondary rate) of the wage-earners does 

not increase the cost of living as this addition to wage is 
only a portion of the reduction in cost of production 

2 Reduced cost of power stimulates its broader use 

3 The larger the use of power in industry per man the higher 

is the earning capacity of industrial workers 

4 With increased earnings of the wage earning class, their 

purchasing (and consuming) capacity increases 



209 

5 With increased purchasing capacity of the people, the de- 

mand for goods increases 

6 Increased demand stimulates production to satisfy same 

(provided it is not abused by a combine to advance prices 
or secure special privileges) and therefore 

7 Increased industrial activity in order to meet the demand 

provides employment for unemployed. 

Benjamin Franklin, discussing the very heavy burden of taxa- 
tion at that time stated that our losses due to idleness cost us twice 
as much, while those caused by lack of knowledge and poor methods 
produce four times greater suffering. If that was true in his days, 
it is indeed, more so in our time. Anyone familiar with our indus- 
trial organization knows that in most of the establishments not over 
half of the productive equipment is actually used and when used it 
is operated with something like half of its efficiency. During the 
war, the industries here and abroad, despite the shortage of men, 
despite poor organization and frequently utterly inexperienced in 
methods and processes, produced a great deal more than either before 
or after. The reason for the wartime increased productivity was 
plainly in the almost unlimited demand for "war-essentials" at high 
prices. The manufacturers were thus induced to spur up produc- 
tion to reap lavish profits while the workmen were stimulated by 
patriotic desire to make the word "safe for democracy" and to see 
it a "better place to live in." As the old )oke goes "whether the 
life is worth living — depends upon the liver," but as we all know 
the "liver" itself depends on the stomach, which in turn depends 
on the pocket. Hence our problem of making life worth living. 

Lord Leverhulme, the world's foremost manufacturer who 
acquired an enormous fortune and a title through a solution of the 
labor problems in his plants, defines them thus: "The chief of these 
basic principles are increased production with consequent reduction 
of overhead charges and reduced operating costs combined with 
shorter hours for workers, resulting in better working conditions, 
leading to greater efficiency and producing higher wages and better 
profits." 

To lead the way toward the realization to these conditions, no 
other group of men is better fitted than the engineers and to begin 
the work no industry is better adapted than this of power production. 
Power industry is the fundamental one, upon which all and every 
industrial activity depends, including a great portion of transporta- 
tion. Disruption of power production throws men out of work and 



2IO 



into untold misery and suffering, while abundance of cheap power 
is the very foundation of prosperity and progress ; moreover, as the 
British Interim Report on Electric Power Situation shows, the wages 
are highest in these industries that use most power per workman. 

The conditions we were accustomed to actually see in the industry 
seem to discourage optimism and the examples of Ford and 
Leverhulme were sometimes pointed out as exceptions proving the 
rule. The increased production was regarded by manufacturers 
with fear, lest overproduction bring to a smash the market prices; 
the increased efficiency was not considered desirable so long as 
profits could be made over and above actual waste; and long hours 
and low wages were considered essential for profit making. To-day 
even the most conservative of them are forced to admit that we never 
had an overproduction of goods, and panics and depressions were 
due to inability of low paid labor to buy enough to satisfy their 
needs and wants. 100 The fear of overproduction thus waning, it is 
getting clear that greater production, by reducing the overhead, and 
charges on partly idle plants, helps in reducing the cost of production ; 
similarly, greater efficiency is being sought to further reduce manu- 
facturing expenses and it is being realized that this greater efficiency 
is incompatible with low paid, fatigued, dissatisfied help. Thus 
larger output at reduced cost could be sold cheaper, while better 
paid workmen can consume more than heretofore under the reverse 
conditions. 

The industrial system, thus modified, receives a new lease on life. 
The author does not claim, of course, that a millennium is thus at 
the door, neither that this new regime is permanent, but the social 
stability may be improved considerably even though perfect 
harmony of interests is still distant. A further step becomes inevita- 
ble, for so long as individual competition among establishments re- 
mains, the aim will be profit, not service. In other words, while 
greater productivity and higher efficiency became indispensable, un- 
der individual profit-making regime, efficiency is still measured in 
dollars, not in efforts and resources conserved. To burn molasses 
under boilers in Cuban plants is profitable but it destroys our food 
resource; to put in use abandoned United States Army trucks, auto- 
mobiles and tires would have been efficient but it meant loss of 
business to French manufacturers; to devise a plan of cooperation 
between central stations and isolated plnats would be beneficial to 
the communities, would conserve fuel and develop very high effi- 
ciency but it may curtail the profit-making of central stations in- 
terests. 



211 



Now, considering these limitations imposed by transient condi- 
tions of the period of reconstruction, it becomes at once evident that 
the first step is that of revision of the time-honored wage basis and 
all its latest ameliorations, profit sharing, individual reward or any 
variety of so-called bonus systems. 

The head of the Interboro Rapid Transit Company for some 
time, quite unmolested by censorship and by Postmaster General, 
has conducted radical propaganda. The gist of it is that while the 
cost of some supplies increased lately over 100 per cent and the 
cost of coal increased 84 per cent, the increase in wages was only 
62 per cent. He candidly adds that the company was "glad" to 
grant this 62 per cent raise andwe have no reason to doubt the 
veracity of their rejoicing over this economy of some 40 per cent 
on the payroll. The lesson to be derived from this cynical example 
is simple and important. It illustrates the fact that the increase of 
wages is always slower than that of the cost of living. Moreover, 
it forcibly puts before us the problems of conservation of human 
race. Percent of rejections from the army draft because of physical 
and mental deficiency was so high as to question whether the earn- 
ings and condition of work do not gradually undermine the health 
of the Nation. The demands of organized labor for the recogni- 
tion of standard wage scale appears therefore not only warranted but 
even inadequate for it leaves out any specific provisions for exceed- 
ing this scale, which in its very nature could not be anything but a 
minimum. 

The premises upon which the wage system tries to establish the 
daily earning is that of absolute minimum of the cost of existence. 
The theory of "free bargain" evidently does not hold water as the 
individual worker, unlike his employer has no other means of sub- 
sistence but the sale of his labor-power. He evidently cannot wait 
long to induce the employer to raise the offer and must accept nearly 
any figure offered. Collective bargaining, lately sanctioned by the 
government, in several instances ameliorates this condition but does 
not reach the bottom of the issue. The point the author desires 
to make clear is that the wage or rather minimum wage is to be 
expended by workmen in three distinct directions : 

1 To buy meals, shelter, and clothing as necessary to restore 

the vital energy spent during his work for his employer 

2 To secure for his family an income adequate to maintain 

the accepted mode of living and to raise children that are 
to replace him on labor market when he himself is worn 
out 



212 

3 To meet the obligations imposed on him by society, by 
government and by morals, i. e., to be able to pay taxes, 
dues, insurance, put up savings and maintain decency in 
his mode of living. 

There is in reality a fourth, and very important group of expenses, 
namely, expenses of acquisition of skill. 

Obviously, in order to learn a trade or profession certain amount 
of money (time and efforts) must be spent both by a man himself 
and by his parents. The higher is the degree of skill to be obtained 
or the more complicated is the study, the larger is the expense and 
the longer the period of training. Moreover, higher intellectual 
development and success in attaining expertness require more com- 
fortable surroundings, more regulated, refined mode of living and 
as a consequence it creates higher desires for recreation not in 
mere relaxation but in enjoyment of art, etc. In other words a 
higher degree of civilized life both precedes and follows the develop- 
ment of a more efficient, intelligent, productive type of man. This 
class of expenses is generally neglected when wages are considered 
and receive a measure of recognition only in cases of leading salaried 
positions. 

Yet, in case of any manual worker it is just as true that to 
develop his laboring power and acquire a given skill, certain amount 
of values must be spent. Therefore, as the costs of producing labor- 
ing powers of different quality differs, so must the value of the 
laboring powers differ. Consequently, different values of laboring 
power must fetch different wages on the labor market. 

While the truth of this proposition as regards different trades 
and occupations is generally recognized both by employers and by 
organized labor, the fact that it is equally true within the same trade 
or occupation is totally obscured by false prejudices. Consider a 
case of two firemen in the same boiler-room, handling the same load 
and using the same coal. It is frequently to be found that one 
man can produce 1000 pounds of steam with say 100 pounds of 
coal, while another burns 150 pounds to produce the same quality 
and quantity of steam. Now, if the second fireman gets a standard 
wage of say four dollars per day which represents the value of his 
work, the value of the work of the first fireman is much higher, 
as his superior skill, knowledge, attentiveness and general intelli- 
gence is instrumental in saving a large quantity of fuel. 

What then is the difference in the values of the labor-power (and 
actual work) of the two of our firemen? Working at their re- 
spective efficiencies the second fireman burns sixty dollars worth of 



213 

coal while the first one, for the same purpose uses only forty dollars 
worth. His labor-power therefore is worth twenty dollars more 
than that of his fellow firemen. 

The inequality of the value of their work is thus plainly exposed. 
Similar examples may be multiplied without end in any trade or 
occupation. The question now to consider is whether this inequality 
of labor values must fetch different labor-price (wages) and if so, 
whether this inequality of earnings endangers social equality and 
democratic principle. 

The answer to the first part of the question has been already 
given, namely, that different degrees of skill must fetch different 
wages as their values and cost of production are necessarily different. 
The second part of the question asked by pseudo-democrats has been 
similarly answered in a most unequivocal manner: The right of 
the producers is proportional to the amount of work they furnish; 
the equality consists in that the labor is measured by an equal 
standard. 

In our example of two firemen the amount of work they furnish 
may not be correctly understood at the first sight. It appears as if 
the more wasteful fellow furnished more work by shoveling 50 per 
cent more coal into his furnace. The fact however is that by 
doing so he destroys the results of work of miners that dug out 
his coal, of railroad men that brought it in, of mechanics that built 
and repaired machinery used in mining and transportation and 
scores of other men and women whose work was directly and indi- 
rectly needed to get to the boiler-room the coal which he, the less 
skillful fireman, sent up the chimney. While the more efficient man 
indeed furnished the country with the amount of work done not only 
by himself but also by all those who were engaged to produce the 
coal he had skillfully conserved. 

Various methods of compensating extra efforts, additional amount 
of work of superior efficiency or quality of work have been sug- 
gested and tried for some time past. These methods were variously 
called "rewarding individual efforts" "differential piece rate," "pre- 
mium plans" and a large variety of "bonus" methods. At this point 
the author desires to vigorously object to all these names as all 
of them imply a false meaning of a gift or gratitude; of something 
that is given when actually it is earned. 

Another fundamental misconception of all these premium plans 
was that the amount of additional payment depended on an arbitrary 
decision of the employer as to what part of additional labor value 
he retains for himself and how big a remainder he will distribute 



214 

among the wage earners. The third common shortcoming of most 
of these schemes is that "extra" reward is offered as a stimulus to 
induce accomplishment rather than as reward for learning. 

The first fallacy shifting the problem from the economic ground 
into moral abstraction makes it uncertain, subject to the good will 
and mood of employer, and unreliable from the workman's stand- 
point. Indeed in some large industrial establishments bonuses and 
premiums were discontinued with change of management. The 
second point frequently discredits the best intentions in the eyes of 
workmen as it is suspected that the added value of labor is out of 
proportion larger than the reward offered. 

The last fallacy, that of offering premium as a bait, is the most 
dangerous one from the labor view as it is capable, unless safe- 
guards are introduced, of tempting some to overwork themselves 
in an attempt to reap large premiums; in any event men left to 
themselves to discover the best method of work cannot do more than 
"work harder." It is the function of the administration to both 
discover better methods and provide training and facilities for prac- 
ticing same. More detailed analysis of these shortcomings of the 
various premium plans have been published by the author 1M and 
need not be again repeated. 

Profit sharing, co-partnership and similar schemes should not be 
confused with premiums and bonuses. Profit sharing has nothing 
in common with wages, indeed it is a plan to reduce standard wages 
by making earnings dependent upon the success of the business. Yet 
business transactions are obviously independent of the workman's 
skill and methods of production. Profit that is to be shared is made 
principally on sales and the higher the goods are sold on the market 
the higher is the rate of profit. Thus profit sharing plans try to com- 
bine high prices with low wages. When finally the dividend is de- 
clared and the employees get their share, this share is obviously 
smaller than the total increase of profits and so the workmen lose 
"coming and going" ; by supporting increased profits he increases the 
cost of living, while counting on a share of these profits he accepts 
lower wages. 

As Lincoln said it is not possible to fool all the people all the 
time; in fact these profit sharing schemes, according to reports of 
the United States Government, have an average life of seldom over 
five years. The advocates of such plans generally admit that they 
do not work very well with workmen while profit sharing is more 
successful with salesmen and officials. This strongly supports the 
author's statement that profit sharing depends on sales-tricks, and not 



215 

on cheap and efficient production. Again, it is a known practice to sell 
certain goods at times below the cost to attract buyers to highly 
profitable lines. The aim of profit sharing and that of efficient pro- 
duction have nothing in common; indeed profit sharing is a con- 
spiracy to make people tolerate and pay for waste incurred in pro- 
duction and made up in sales. 

The modified bonus plan practiced by the author for many years 
with entire satisfaction is characterised by freedom from the above 
handicaps and deficiencies. The two-rate wage is based on follow- 
ing fundamental principles: 

1 It provides means and facilities for securing and developing 

additional skill 

2 It offers extra compensation for exercising the acquired 

skill, over and above guaranteed wage 

3 The amount of "bonus" is a definite part of the additional 

value of the work done 

4 It eliminates arbitrary adjustments as it is based on measure- 

ment of quality of work the man performs, adjusted for 
conditions beyond his control 

5 It prevents overwork inasmuch as quality, not quantity of 

work is the measure of value of work 

6 It secures equality (both of opportunity and of compensation 

for skill) as it is based and measured by an equal standard. 

Practical application of this modified bonus plan, which is ac- 
tually a two-rate wage, demands the fulfillment of certain prere- 
quisites as to the mode of management, or rather administration of 
the plant. In order to provide means for securing superior skill, 
the first step is a thorough, minute and complete study of : 

1 Possibilities that could be realized with the existing plant 

layout and equipment 

2 Best fitted fuel and supplies for equipment and service de- 

mand 

3 Best method of controlling processes 

4 Adjustment of hours of work 

5 Securing safe and sanitary conditions 

6 Division and definition of personnel's functions 

7 Adequate, continuous, accurate and graphic recording of 

performances and conditions. 



2l6 

When these studies are completed (and they cannot be carried 
out without suitable instruments and expert direction), actual train- 
ing and instruction may be carried out. In this stage of the work 
those employees who assisted in discovery and standardization of 
best conditions and methods become leaders and instructors, their 
chief work consists in helping less skilled and newcomers to acquire 
necessary knowledge and expertness. 

The science of management has been sometimes denned as the 
transfer of skill from men to machines thus robbing man of his 
most valuable possession and at the same time making his work 
auotmatic and monotonous. Nothing is farther from the truth. 
Whenever science is applied to the problems of production, what- 
ever skill is at the command of specialists is transferred to men, 
in order to enable them to use the machinery more intelligently. 
The exercise of this intelligence and skill, resulting in greater operat- 
ing economy fetches additional compensation, that is, secondary 
wages over and above primary rate of wages which is merely an 
accepted cost of living for a given trade or occupation. 

Thus if it has been determined that an extra skilled fireman 
can increase evaporative efficiency say from an average of 60 to 70 
per cent, which in a given plant represents a saving per man per shift 
of say two dollars, a definite agreement may be entered that for in- 
stance half of the saving be the share of the owners as their reim- 
bursements for expenses incurred in providing facilities, cost of 
experiments and compensation for educational work, while the other 
dollar will go to firemen who, by learning better way and following 
it, performed more economical work. 

In each case, or in each occupation, the conditions are so analyzed 
that the quality of the man's work is independent of the preceding 
operation or of mistakes of others, at least as far as the present state 
of art permits ; in cases of doubt or if quality of work is spoiled by 
others or by uncontrollable condition or by mistake of management, 
the secondary rate of wages (bonus) is paid, the management thus 
accepting responsibility for lack of knowledge or control. 

In the case of firemen, for example, neither cost of steam nor 
quality of fuel, gas and ash nor any other isolated or complex 
criterion would form a correct basis for judging the quality of their 
work. Efficiency of generation of steam, equated for quality of 
fuel, quality of steam and temperature of water does represent 
however the basis upon which the measurement of the quality of 
work can be made accurately as involving none of the elements 
over which firemen has no control. Exception may be pointed out 



217 

as to physical conditions of furnaces and boilers. This is generally 
taken care of by provisions for best maintenance ; if this is neglected, 
a bonus is paid to firemen irrespective of results. 

Under such condition the "speeding up" and dangers of over- 
work are unthinkable. Quality being the criterion, results are in 
the direction of reduction of physical fatigue. Indeed in most of 
the cases a great reduction of working hours increases the efficiency 
of work to such an exetnt as to make it very desirable from the 
viewpoint of the employer to reduce the number of hours. Many 
examples are known and reported that shortening of working day 
increased productivity and cheapened the product. In power-plant 
work reduction of hours from 12 to 8 alone produced a fuel economy 
nearly twice as great as the pay-roll of an additional shift of fire- 
men (getting per 8 hours as much as per 12 hours before) ; and 
the author has some data indicating that four six-hour shifts will 
further improve operating economy. 

From the preceding brief outline it is already clear that efficiency 
or skill of performance adopted as a basis for secondary wage pay- 
ment furnished a basis of equality in measurement. Physical in- 
equality of men have hardly anything to do as no unusual or extra 
strain is required. Wherever such conditions prevail, as in yard 
labor, the judicial adjustment of jobs to men solves the problem. 
Furthermore, the training and instruction provided, offers means by 
which anyone can attain a desired degree of skill and secure results 
fetching secondary rate of wages. Again, as in the case of fire- 
men, if certain efficiency is accepted as an evidence of skillful opera- 
tion, the inability of boilers to produce much greater efficiency are 
so rigid and well established that there is no sense in apportioning 
the secondary wage rate to a degree of efficiency, while in other 
occupations with wider limits of possibilities it can be accurately 
measured and rate advanced in proportion to the degree of expert- 
ness in securing larger economies. 

An added advantage of this plan could be mentioned here, but the 
author prefers to use the language of Viscount Haldane, a man 
prominent in British industrial life and active with problems of re- 
construction. Said he referring to the plan of uniting hand and 
brain work : "Monotony will at least be diminished when men feel 
that they have always to be thinking when they act, and that the 
occupation of the workmen depends on knowledge and skill, and 
belongs to what is truly a profession. It will require education and 
training to bring this about, but if it can be done, even partially, it 
will give more freedom of the spirit and it will give something more 



2l8 

besides. It will afford an opening for exceptional talent, and for 
its development to the man who possesses it. For the factory and 
the mine will tend to become places where there is a graduation of 
direction, dependent on capacity for directing." To this the author 
would add that in a number of instances, where our plan is work- 
ing, it works actually in this direction, and Haldane's "*/ it can be 
done" is answered by facts. 

Concluding his report on the working of my method for several 
years at the Penn Central Light and Power Company, the superin- 
tendent of plants said to the convention : "Not only have the results 
of the introduction of the new boiler-room practice been most grati- 
fying from the standpoint of reduction of expenses to the com- 
pany and improvement in the conditions affecting the workman and 
his compensation but it has also increased the mutual respect be- 
tween management and workmen and has developed the esprit de 
corps which is so beneficial to both." loa 

Again, this method of meeting the labor problem was emphasized 
by the chief engineer of Strathmore Paper Company when he said 
to the Technical Association of Paper and Pulp Industry: 103 "The 
human factor in this whole work is of paramount importance. With 
the present scarcity of labor, high rate of wages paid in other indus- 
tries, and numerous temptations to quit and try luck somewhere else, 
we have felt that no effort should be spared to make our employment 
as attractive as possible. We therefore started our reorganization by 
building service room for boiler-room employees, with shower bath, 
lavatories and lockers. We provided restful seats in the boiler room, 
an ample supply of running water for drinking, improved ventila- 
tion, better designed tools, wheelbarrows rebuilt to carry heavier 
loads with less effort, and other minor improvements and conven- 
iences to make the work less arduous and more pleasant. The re- 
sults have fully justified the expenditures." 

Last but not least this work of increasing the skill of the em- 
ployees and compensating them for the exercise of it accordingly, 
brings about the reduction of the working hours. Exercise of higher 
skill requires more attention and, since physical endurance of men 
is greater than mental or nervous, long hours and high economy are 
incompatible. The twelve-hour shifts are always replaced by eight- 
hours, while six-hour shifts are still more promising. In every case 
of course, men get the same per diem standard wage. 

Now the last question before us is that of effect of this two- 
rate wages on the cost of living. It has universally been observed 
that whenever wages are increased the cost of living increases also 



219 

and the net gain of wage earners is short-lived and frequently fic- 
titious. This fact is inevitable inasmuch as wages, constituting part 
of the cost of product, are included in selling price. The larger 
the wages, the larger is the addition to the price of product, but 
since one branch of industry depends and influences all others, not 
only the price of one product rises but of nearly all of them, which, 
in turn, leads to demands for wages increase in other industries. 
Moreover, countless examples could be cited when small advance in 
wages was used as excuse for large increase of selling price. 

The two-rate wages cannot produce this economic effect; indeed 
quite the contrary, that is, the drop of prices correspond to high 
secondary rate. The reason is o^byious. The amount of secondary 
rate of wages depends upon exercise of additional skill. Additional 
skill improves method, reduces waste, minimizes interruptions, in- 
creases productivity, etc., and hence reduces the amount of materials 
worked into product and decreases the overhead expenses, charged to 
it. Thus the amount paid as secondary rate wages is already deducted 
from the production cost. Moreover, so long as the employers 
themselves retain a portion of this value from more skillful opera- 
tion, their profit is safeguarded, if not increased, even when the 
product is sold at a lower price. 

The inevitable consequence of this situation is that earning more, 
the employees can buy more thus stimulating industries and provid- 
ing more employment without running the risk of creating business 
depression. Many years ago, the late Dr. R. H. Thurston made a 
prophetic statement: "Our present common wage system must in- 
evitably be improved upon in the coming decade if we are to avoid 
very grave disturbances in our social system. Clouds have been 
gathering for a half century, and they are growing more numerous 
and darker continuously. A storm will surely come if a pleasanter 
atmosphere is not introduced as the result of the efforts of wise and 
thoughtful men in the immediate future." The employers were slow 
to take notice and readjust the wages and relations and so to-day 
the country has to pay for their blind obstinacy of not following 
the teaching word of an engineer. 



Chapter VIII 

MASTERING PROCESSES 

ANY wilful act must have a preconceived aim. Until very 
recently business had as its sole aim the securing of profit 
through marketing a commodity and the satisfaction of the needs 
of the community, the nation and humanity was not the aim 
but merely the means whereby the profit could be obtained by 
supplying these necessities. Hence, the cost of production was 
a matter of subordinate importance; the main issue was 
whether the difference between the cost of the product and its 
market price was great enough. Working along the line of the least 
resistance, more attention was paid to the increase of this differ- 
ence by enhancing prices and stabilizing markets, than by a 
reduction of manufacturing expenses. 

The war brought forward a new aspect — the supremacy of 
the needs of the community to those of an individual, and pro- 
duction for the common good became a keynote of the industrial 
readjustment. A task of such magnitude caused the shifting of 
the center of gravity in the problem of industrial management — 
that is, the reduction of industrial wastes became the predominat- 
ing supermost task. As long as this is done with correspond- 
ing decrease of production cost it is obviously to the mutual 
benefit of private enterprise and the welfare of the country. 
Whenever it is not so, or the task appears to be a difficult or haz- 
ardous one, the state must assume the risk of operating the socially 
necessary industries. 

With the present speculations on fuel and corresponding in- 
crease in the cost of power, with the existing possibility of cur- 
tailing production due to lack of fuel, not to mention the co- 
existing danger to the health and well-being of the people, the 
problem of wise mastering appears in all its gravity and assumes 
the importance of an international issue. 

The customary hit-and-miss attempts at fuel conservation, 
labor conservation, etc., that came into favor during the war 
had at that time the excuse of necessary "speed to meet the 
contingency without diving into refinements." But "autocratic 

220 



221 



efficiency" must give way to a "democratic cooperation" in order 
to accomplish larger and lasting results. 

While a measure of improvement in our national game of de- 
struction of fuel was announced by the Fuel Administration, the 
margin of preventable losses still remains extravagantly large, 
and we hardly can be satisfied with the old haphazard methods 
in the face of our task of reconstruction. The real mastery of 
processes begins with a study of the laws of the phenomena 
which we wish to control. An engineer not equipped with a 
thorough knowledge of philosophic methods and not trained 
along the lines of logical scientific analysis will fail to accom- 
plish much in this branch of the profession. It can truly be 
said that we know but little of the nature of the forces with which 
an engineer must deal ; electricity is not as yet susceptible to any 
definition; heat may be explained by a half dozen different 
theories, hypothesis of phlogiston, atomistic theories, etc., are 
nothing more than exhibitions of our mental inability to under- 
stand the nature of things; and our efforts to represent the so- 
called "laws" of nature in mathematical form of equation, curves 
and formulae are nothing more than a convenient method of 
memorizing certain similarities observed from repeated phen- 
omena. However, a frank admission of "ignorabimus" in re- 
spect to certain subjects does not diminish in the slightest the 
value of the present state of science ; still less may it discourage 
the earnest effort to strive for further discoveries and better un- 
derstanding of phenomena with which we have to deal. 

The year 1620, when Francis Bacon (Baron Verulam, Viscount 
St. Albans) published his epoch making work, entitled Novum Or- 
ganum, may justly be regarded as the date of the birth of the modern 
or positive science. Rigorous observation and careful experiment, 
the accumulation of facts and systematic analysis of separate in- 
stances before probable truth could be affirmed — such is the 
general conception of Bacon's achievement. But, like all epoch- 
making works, Novum Organum gave expression to ideas which 
were already in the air. The time was ripe to wipe off the de- 
caying scholasticism and authority of churches and traditions 
were discarded. Any progress, especially in scientific discoveries, 
is made mainly, if not solely, by the employment of hypothesis, 
and for that Bacon's rules of induction cannot be applied. Yet, 
the framing of an hypothesis is no mere guess work. It re- 
quires a preliminary critical induction and subsequent experi- 
mental comparison, verification, and proof, the canons for which 



222 

may be laid down with precision. This task was accomplished 
by Bacon in his philosophy of induction, giving prominence to 
such powerful logical instruments as exclusion or elimination. 
The application of the principles of scientific analysis, as 
should be expected, was first made to the research work con- 
ducted in laboratories, libraries, universities, and engineering 
bureaus, and it was only very recently, through the indefatigable 
efforts of F. W. Taylor and H. L. Gantt that the principles of 
scientific researches were brought into the shop and adopted to 
explode and wipe out the fallacies of traditions, opinions, and 
habits that reigned supreme in our everyday toil. During the 
last score of years much has been said and written on the subject 
of scientific management and not infrequently the question was 
asked "why it is termed scientific?" Indeed the question was 
asked frequently and persistently and the majority of answers 
were so evasive that some writers began to use quotation marks 
for scientific management as if they wanted to repudiate all re- 
sponsibility for the use of this term. It seems therefore doubly 
profitable to quote here from Bacon's Novum Organum a few 
paragraphs, as upon these principles, as well as those almost 
simultaneously laid out by Descartes and his Cartesian school, 
all modern or positive sciences were based and developed. 
Bacon's critique of unscientific method and then his construc- 
tive canon of scientific investigation, truly should be read at 
least once a year by anyone who does not care to get into a rut. 

Unscientific Method 

"81. The majority so far from proposing to themselves the 
augmentations of the mass of arts and sciences, make no other 
use of an inquiry into the mass already before them, than is 
afforded by the conversion of it to some use. . . . 

"82. It is sufficient to astonish any reflecting mind, that nobody 
should have cared or wished to open and complete a way for the 
understanding . . . and regular, well-conducted experiment; but 
that everything has been abandoned either to the mists of tradi- 
dition, the whirl and confusion of argument, or the waves and 
mazes of chance and desultory, ill combined experiment. 

"When anyone prepares himself for discovery, he first in- 
quires and obtains a full account of all that has been said on the 
subject by others, then adds his own reflections, and stirs up 
and, as it were, invokes his own spirit, after much mental labor, 



223 

to disclose its oracles. All which is a method without founda- 
tion, and merely turns of opinions." (Novum Organum, p. 339.) 
"84. With regard to authority, it is the greatest weakness 
to attribute infinite credit to particular authors, and to refuse 
his own prerogative to time. . . . For truth is rightly named the 
daughter of time, not of authority. It is not wonderful, there- 
fore, if the bonds of antiquity, authority, and unanimity, have so 
enchained the power of man, that he is unable (as if bewitched) 
to become familiar with things themselves. (Ibid. p. 341.) 

Scientific ; Method 

"100. We must not only search for, and procure a greater 
number of experiments, but also introduce a completely different 
method, order, and progress of continuing and promoting ex- 
perience. For vague and arbitrary experience is (as we have ob- 
served), mere groping in the dark, and rather astonishes than in- 
structs. But when experience shall proceed regularly and unin- 
terruptedly by a determined rule, we may entertain better hopes 
of the sciences. ,, (Ibid, p. 351.) 

"101. ... no experiments have been committed to paper. 
We cannot, however, approve of any mode of discovery without 
writing, and when that comes into more general use, we may 
have further hopes. 

"103. Our road is not a long plain, but rises and falls, as- 
cending to axioms and descending to effects." 

"105. In forming axioms we must invent a different form of 
induction from that hitherto in use; ... a really useful induc- 
tion for the discovery and demonstration of the arts and sciences, 
should separate nature by proper rejections and exclusions, and 
then conclude for the affirmative after collecting a sufficient 
number of negatives." 

"108. We may, therefore, hope for further, better, and 
more frequent results from man's reason, industry, method, and 
application, than from chance and mere animal instinct, and the 
like, which have hitherto been the sources of invention." 

"113. For men then only begin to know their own power, 
when each performs a separate part, instead of undertaking in 
crowds the same work." 

"121. . . . (our method) will appear to the vulgar, or even 
any mind accustomed to the present state of things, fantastically 
and uselessly refined. Hence, we . . . must again repeat, that 



224 

we look for experiments that shall afford light rather than profit/' 

Since this has been written, the facts have proven that the 
statement of Bacon regarding experiments affording "light rather 
than profit" is altogether too modest, because this very "fan- 
tastically and uselessly refined" experimental, or scientific meth- 
od, when applied to industry (particularly power industry), 
affords indeed a great deal of material profit. 

The application of these methods of scientific analysis to 
chemistry, technology and all forms of engineering brought about 
results the significance of which we may grasp only if we com- 
pare the state of science and mode of living of to-day with these 
of the seventeenth century. As applied to the mastery of our 
technical processes, this scientific method of analysis or research 
begins with the study of elements and proceeds through experi- 
mental observation of their interrelations and influence one upon 
the other to a synthesis. Insufficiently clear understanding of 
these principles often creates a confusion of means with methods, 
that is, a confusion of forms and implements with the method. 
Quoting from the author's second lecture given at the Sheffield 
Scientific School, Yale University in 1915 : "It is not the result 
that we seek, but the method. Under the proper method the best 
result will be obtained unavoidably." 

To accomplish this task we evidently must have the aim, the 
plan, and the mechanism whereby the aim can be attained by 
following the plan. Yet in putting this scheme into practice, 
these three elements become so closely interrelated that a super- 
ficial observer may fall into a trap and accept mechanism for the 
plan and its working for an aim. Obviously, great confusion 
will arise in such a case when incidental and auxiliary facts are 
regarded as a basic and essential. Such a "system" is bound to 
degenerate into irksome and useless ballast. Thus tests, rec- 
ords, etc., while invaluable as a means for discovering the truth 
and the best ways of accomplishing certain work are useless 
if made out merely to fatten the files, and are decidedly harmful 
if carried out without a clear understanding of the purpose they 
are ultimately to serve. 

In many a power plant of to-day, especially of a large size, 
it is common to find not only generating equipment of high poten- 
tial efficiency but also an array of up-to-date instruments, measur- 
ing and analyzing devices and an assortment of printed forms, 
logs, card-indexed files, etc. In other words, the means avail- 
able seem to be as nearly perfect as may be obtained, yet the re- 



225 



suits secured are far from perfect, for faith is pinned to the forms 
and mechanism and not to the principles and methods of using 
them. 

The designers and builders of power-plant equipment, mak- 




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\<- ._, 9 , 6 — ->4<- 12>17 

Fig. 58. — Net Saving Due to the Use of Boiler Room Instruments 
The characteristic actual case from the files of the writer indicates that the 
complete installation of the boiler room instruments as shown on Fig. 59, paid for 
itself within six months. Report on the case is reproduced in the text. 

ing a thorough use of the present scientific methods, apparently 
left nothing for the operating engineer and the manager to do but 
to secure the maximum efficiency inherent in the machinery they 
have calculated, designed and built. Weight, speed, frequency, 
voltage, capacity, steam consumption, etc., of a generator are 



226 

known before the drawings are sent to the shops and after it is 
built its characteristics and efficiency are the same as were pre- 
determined beforehand. Yet the same turbo-generators attended 
by different men would show different degrees of efficiency de- 
pending on their judgment and skill ; again the same firemen 
using same boilers and the same fuel would produce different 
results under different modes of management. The problem is thus 
to predetermine the desired result of actual operation and to find 
the method of actually securing it. 

The first part of the task evidently involves finding answers 
to three separate questions : 

1 What is the maximum inherent efficiency of each indi- 

vidual and variously combined units of equipment? 

2 What is the possible maximum efficiency of the plant 

(consistent with the nature of the service and safety of 
operation) that results in the minimum expenditure of 
materials, efforts and money? 

3 How can this ultimate practical efficiency, inherent in any 

given plant, be secured (consistent with the most benefit 
to the community) under variable conditions of service? 

In the process of power production we have to reckon how- 
ever, not merely with thermodynamic transformation of energy, 
but with human and social forces as well. 104 Paraphrasing my 
oft-repeated statement that it is not the perfection of equipment 
but the mode of its use that causes the success or failure of opera- 
tion, the Engineering Bulletin No. 2, prepared by the United 
States Fuel Administration, admits that "a good plant poorly 
operated will show low efficiency, while a poor plant skillfully 
operated will sometimes show a relatively high efficiency. ,, In- 
deed it becomes almost a trait to repeat that "the performance 
demonstrated during the test is seldom attained in practice" or 
that "conditions change from day to day, from hour to hour, 
even from moment to moment. These changes must be inter- 
preted, and the degree of intelligence with which they are in- 
terpreted marks the degree of success which will be realized in 
fuel saving." * 

Mr. Lazarovich-Hrebelianovich described 105 a glaring case 
of this rise and fall of efficiency in a public utility power plant. A 

* See discussions of author's paper "Standardization of Operating Costs," 
Transact. A. S. M. E., Vol. 191. 




Fig. 59. — Boiler Room Instrument Board 

The effect of installation and use of this instrument board is shown on the 
diagram Fig. 58. 




Fig. 60. — Instrument Board in a Boiler House 
The peculiarity of this board is that every instrument except pyrometer is 
recording. Note flap desk for log and handles with screw adjustment for proper 
setting of dampers. 



227 

considerable improvement of operating efficiency and economy 
was attained without any change in generating equipment merely 
by a thorough study of processes and careful training of em- 
ployees, while a marked loss in steam-generating efficiency fol- 
lowed the change of personnel. Installation of improved auto- 
matic stokers, etc., proved insufficient to restore the former 
operating efficiency and, while some economy was secured by an 
installation of larger turbo-generating equipment and increased 
electrical output, a large amount of fuel was being wasted in 
addition to greatly increased overhead charges caused by modern- 
ized equipment. 

Such facts on record offer an Argument which should be con- 
vincing to anyone that, quite apart from the perfection of equip- 
ment, the economy of operation depends on the degree of knowledge 
which is being exercised in mastering the processes. 

Avoidable and Unavoidable Losses 

In the preceding chapters we have reviewed the elements that 
enter into the various complex relations during the process 
of power production, that is, we have discussed the plant, 
its equipment and its personnel. Each of these three groups of 
factors, first studied independently of each other, should now 
be investigated in their working co-relation and their peculiarities 
noted and understood. As in any problem involving several vari- 
ables, certain grouping of them produces different possible limits. 
The question therefore is now to determine the most favorable 
combination of variables constituting the plant as a whole. More- 
over, as the service the plant is to perform, the load it is to carry 
and certain other conditions constantly change, we must establish a set 
of conditions by which we can meet our task under varying cir- 
cumstances. Naturally, the best possible result will not be the 
same under every circumstance, but whatever the limit, we 
must ascertain what is the best result in each case. 

A general case presents two distinct phases, the first a deter- 
mination of limits that are beyond control of the operators and 
second, a definition of causes and results within the operator's 
control. Let us take for an illustration a turbo-generator. Its de- 
sign and construction are such that using steam say of 500 de- 
grees fahrenheit and 180 pounds per square inch pressure its 
steam consumption will be at a rate of 14 pounds per kilowatt 
hour when exhausted into a condenser with 28 inches vacuum 



228 

and with a total load of say 4,000 kilowatts. Actually there is 
only a 2,000 kilowatt load to carry and, under this load, the turbine 
consumes say 19 pounds per kilowatt hour. This loss of 5 pounds 
per kilowatt hour, or 10,000 pounds of steam per hour, or half 
a ton of coal per hour plus half the overhead expenses, etc., 
is obviously beyond the control of the engineers, firemen, etc., 
for it is caused by lack of demand. So far as this class of em- 
ployee is concerned, this loss is unavoidable. 

Now assume that firemen, maintenance men, and engineers 
do not attend to their duties in the proper manner; the firemen 
failed to carry the required steam pressure and to secure high 
evaporation per pound of coal; the maintenance men neglect 
superheaters, pumps and stokers; and the engineers overlooked 
the drop of vacuum, etc. The load being the same, steam con- 
sumption per kilowatt hour due to these unfavorable conditions 
of pressure and superheat and possibly even direct steam leaks 
increases from 19 pounds to 22 pounds. The loss over and above 
of that determined as inevitable will be 3 pounds per kilowatt 
hour or 6,000 pounds per hour, yet the loss in fuel will not be 
600 pounds per hour, as it would be if the ratio of evaporation 
be maintained in the rate of 1 to 10, but still larger. If the evapo- 
ration ratio is now 1 to 8, the fuel loss again will not be 750 
pounds per hour but: 

2000X22 2000X10 1 , 

= 1700 pounds per hour. 

o 10 

The loss of 1,100 pounds of coal will be due to poor ratio of eva- 
poration and the 600 loss of pounds due to quality of steam and 
vacuum. 

Losses of this character, being due to the method of operation 
are avoidable so far as the plant force is concerned. From a 
broader viewpoint of mastering power production, however, both 
examples illustrate preventable losses, for the loss of the first 
case, caused by insufficient load for the size of the equipment, may 
be avoided by securing additional load. If however there is no 
opportunity to utilize to the full advantage the large unit, this loss 
might have been avoided if equipment of a more suitable size 
had originally been installed. This distinction, however, will gain 
in clearness if we agree to change the terminology and call the 
losses of first category as managerial losses and those of the 
second group as operating losses. The distinction is of great im- 
portance from the practical point of view as it helps not only 






229 

to allocate the responsibility but, what is more important, to de- 
vise the remedy. 

The practical task carried out along this line of demarkation 
is thus divided into two distinct groups of research — first deter- 
mining what the degree of perfection may be expected from the 
plant or any unit of it under various requirements of service; 
second defining what conditions are necessary and sufficient for 
obtaining this predetermined result. 

Obviously, the "degree of operating perfection" permits vari- 
ous interpretations, depending upon the criterion. If our supreme 
aim were minimum expenditure of money for a unit of output, 
thermodynamic efficiency, human welfare, safety, etc., must be 
sacrificed. Again, if ultimate consumption of fuel is the para- 
mount criterion, there might be conflicts with other influential 
factors. But when the maximum benefit to the community is 
accepted as the final criterion of the perfection of the processes 
of power production a definite balance can be found among vari- 
ous conflicting factors. 

These considerations bring us face to face with the two new 
problems: first what is the criterion for judging the perfection 
of production and second where is the division of responsibility 
for the attainment of desired results between the operating and 
directing forces. 

Steps in Investigation 

Plant owners have for so long been in the habit of put- 
ting the blame for low efficiency on engineers, firemen, and 
workmen that they grew accustomed to summarily keep the 
employees responsible for unsatisfactory results and exonerate 
themselves from responsibility by installing equipment repre- 
sented by salesmen as automatic and efficient. Not less fre- 
quently we meet with quite another tendency of talking them- 
selves into belief that the plant is in the hands of "the best en- 
gineer in the country," but, having no records nor standards, 
with which to judge his work, their gain in comfort is greater 
than in profits. 

Both these attitudes, however, are rapidly becoming matters 
of the past and the more intelligent tendency to find out what 
the plant is actually doing and what is it capable of doing is 
gaining ground. As in every case when a new line of studies is 
undertaken, by men unfamiliar with the problem, a great deal 



230 

of confusion is apt to develop. In the days of reciprocating en- 
gines the use of indicators was preached and the plant owners de- 
veloped a fad for demanding indicator diagrams, trying to detect 
slight maladjustment of valves, but leaving alone poor com- 
bustion and evaporation. With turbines coming in vogue steam 
consumption was expected to follow the builder's water-rate curve 
and the COs analysis became fashionable. Coal analysis and 
buying coal on the B. t. u. basis gained at one time a popularity. 
To be sure measure of gain was secured from all, but the re- 
sults of these spasmodic studies of isolated factors were naturally 
so meager that the full extent of possibilities was not even 
appreciated. Those concerns, that by the virtue of large annual 
coal consumption or for other reasons, wanted to get more re- 
liable and complete data about their power plants, adopted a 
policy of periodic testing of their boilers and other equipment. 
The benefits derived therefrom were similarly of very question- 
able value and produced in a majority of instances more harm 
than good, for satisfactory results obtained during such tests 
were not representative of the average daily practice, yet they 
often were accepted as proofs that everything was well. The 
belief that there is no room for improvement, like any other 
comfortable belief is not easily parted with and many plants, 
running periodic tests were wasting enormous amounts of fuel 
and energy. An owner of a large power plant, who ran one boiler 
out of thirty-six under continuous test throughout a year came 
one day to a sad realization of futility of such a practice and 
wrote to me that "if the rest of the boilers were operated as well 
as our test boiler, we would not have had to use 68,000 tons but 
only 54,000 tons last year." In other words this policy of sample 
testing instead of that of continuous records costed him $75,000 
each year while the country in five years lost 70,000 tons of coal 
produced. The ultimate good derived from this lesson, was his 
adoption of a plan whereby every boiler was receiving the same 
attention as the test boiler. 

Instrument Equipment 

The necessity of having measuring devices for the purpose 
of controlling the processes is gaining recognition but much 
uncertainty still exists as to the benefits derived therefrom. 109 Ob- 
viously enough, mere possession of measuring and indicating 
instruments is not sufficient to secure an economic operation, 



231 

neither reading and recording of the indications could possibly 
improve the operating efficiency unless the indications are (1) 
understood, (2) effect on the results interpreted and (3) steps 
are taken to adjust the operating conditions in accordance with 
established relations between conditions and effects. Unless 
the management is prepared to make proper use of the instru- 
ment equipment, the investment in such is of doubtful value. 
This seems to explain the hesitation and doubts with which old- 
fashioned management meets the requests for such instruments 
as the plant engineers or salesmen frequently recommend. 
Again, there are many cases where the investment does not pay 
for itself because of lack of provisions for its proper use. As a 
rule, the operating force cannot, without outside or special help, 
derive full benefit of an instrument for the following reasons : 

1 Lack of time for preliminary studies of relations between 
necessary conditions under variable circumstances for securing 
best results. Operating engineers, plant superintendents and 
their co-workers are primarily concerned with running the 
plant, not running the tests. 

2 Lack of training for very specific and minute observations, 
investigations and analysis of the data collected during the tests. 
Special training and long experience needed for this kind of 
work is usually not required from the members of operating 
staff, indeed it is often regarded as undesirable — "practical" men 
being often given preference to scientifically trained ones. 

3 Lack of confidence is also sometimes offered a great handi- 
cap when a large power plant employs "young graduates" to 
run tests, keep records, etc. These men, if properly guided can 
be of enormous value for the reason of their training and full 
opportunity and unlimited time to discredit wrong practice and 
to devise a better one. Yet, lack of broader experience with 
operating problems sometimes misleads them as to plan of work, 
proper perspective of the essential and comparatively unimportant 
may be lost. Usual outcome of their work is that the find- 
ings, however accurate and valuable, are submitted for approval 
to some one senior in age or position. This person, not having 
personally developed the practice recommended may (and fre- 
quently does) doubt the findings from the standpoint of tradi- 
tions and habits and not seldom modifies it before putting into 
use with almost inevitable result that "modification" nullifies its 
value. If, as sometimes happens, the investigator is given the 
opportunity to see that his recommendation is lived up to and 



232 

new practice is inagurated, he similarity works under a great 
handicap : men affected are slow to recognize his authority, for 
he is not directly responsible for the work of the men. The 
latter, however, fearing a failure if the new practice is adopted, 
follow it only superficially, clinging as fast as they could to 
the old established routine. Necessarily, such trials fail to pro- 
duce full value of advanced practice and the work soon falls into 
a disrepute. 

The engagement of a recognized expert from outside, to 
direct this study work and pass on thus devised practice, obvi- 
ates all these fundamental causes of failure of home medicines. 

The careful and thoughtful use of instrument equipment 
(even without payment of two-rate wages or any incentives) 
invariably produces quick and gratifying results. A report of 
one power supervisor on the effect of installation of some 
instruments permitting him, with our help to control more accu- 
rately the operating processes is interesting as it is typical of 
all such cases : " ... it is evident that in the four months 
preceding the installation of boiler control board, the savings 
on fuel, due to various steps taken, averaged $435 per month 
while, in the four months following the installation of the in- 
struments, the savings computed on the same basis, averaged 
$1,135. In other words, the increased savings, due solely to the 
intelligent use of instruments on the boiler control board, was 
$710 per month or $8,620 on the annual basis, which means that 
the expenditure of $2,080.46 for instruments of the said board 
is an investment which in our case yields over 400 per cent 
profit." Figure 58 shows graphically the sayings accomplished 
over and above the complete amortization of the instrument 
and installation within the first year, while Figure 59 visualizes 
the board itself. In passing we should note that the plant in 
question is a bleachery boiler house consuming between 150 
and 200 tons of coal per week. 

The next question that comes up in connection with the 
means for investigating existing operating efficiency and the 
development of better methods is : What instrument equipment 
is necessary and sufficient for the purpose? Evidently it is not 
possible to specify a set of instruments that would meet the re- 
quirements of every plant. The character of generating equip- 
ment, its lay out, service conditions, specific problems, etc., de- 
termines actual selection. In the author's paper before the 1918 
spring meeting of the American Society of Mechanical En- 




Fig. 6i. — Boiler Control Board 

Note selective connection of any boiler with 3-point draft gauge and flue gas 
sampler. Each steam main has independent recording flow meter, as well as each 
boiler, having indicating instrument on board and recording in the office. Each 
of the three economizers has independent recording thermometer and one record- 
ing thermometer for the common feed line from heater. Speed of stokers and 
speed of draft fans regulated from the board. 



233 

gineers we said in discussing this subject: "While the generation 
of power, and more specifically of steam, is the domain of the 
scientifically trained engineer, power-plant practice is conspicu- 
ous by the lack of accurate measurement of conditions and re- 
sults." 

Unless the results obtained are known, no opinion as to per- 
fection of operation can be sound; furthermore, the practice is 
necessarily wasteful unless means are available to observe the 
conditions under which the process is performed. All instru- 
ment equipment of the boiler house can therefore be grouped 
into two classes : 

1 Recording the results^/ 

2 Showing the conditions. 

A plant in which it is not known how many pounds of coal are 
used per 1,000 pounds of steam, how the load is distributed 
among the units and throughout the day, etc., wastes fuel by 
necessity. The knowledge of these data does at least open the 
eyes of those responsible for its success, and further progress 
is thereby made possible. 

The first group of instruments thus comprises : 

Quantity 1 Recording coal scales 

2 Recording steam or water meters 

Quality 3 Coal calorimeter and balances 

4 Feedwater thermometer 

5 Steam pressure gauge, and thermometer. 

The second group of instruments is intended to direct the 
processes by controlling conditions : 

1 Steam flow indicators 

2 Draft gauges 

3 Flue gas thermometers 

4 Flue gas analyzers. 

The substitution of steam flow indicators by coal or oil me- 
ters is absurd, as it leaves obscure the output for given input ; draft 
gauges may be substituted by Pitot tubes. Other modifications are 
sometimes desirable, but the above equipment is necessary and 
sufficient in general cases. 



234 

Any investment in instruments is a pure waste of money, and 
leads to demoralization unless means are provided for: 

1 Training men in their proper use 

2 Interesting men in their proper use 

3 Providing complete, exact, and continuous records of con- 

ditions and results. 

Location and arrangement of instruments shall be such 
as to: 

1 Permit simultaneous readings and their comparison for any 

one unit 

2 Permit plain view of units from instrument board and 

reverse 

3 Afford the opportunity to use one instrument for several 

units 

4 Eliminate unnecessary fatigue of observing scattered 

instruments 

5 Assure ease and simplicity for testing and calibration. 
These requirements are combined in the type of instrument 
boards devised by the author, typical installations being repre- 
sented by Figures 60, 61, 62 and 63. 

A fallacy of economizing on instrument equipment or ignor- 
ant attempts to select only "the most important" ones has only 
one rival in absurdity — the tendency of installing instruments 
without giving the employees the opportunity to use them to 
advantage. Obviously, the operating men seldom have (1) 
time, (2) opportunity for research work, or (3) inducement to 
carry out investigations, standardize methods, and set tasks. It 
should be therefore the duty of the management to render them 
necessary aid and to assume responsibility for results. 

In this connection it may be of interest to give the description 
of a representative instrument installation in a typical boiler 
room, employing words of the people using them. This descrip- 
tion is that given by chief engineer of a large paper company 
before the Technical Association of the Pulp and Paper In- 
dustry 10 ' of the boiler control boards which he thus describes 
were devised by the author to meet their requirements. 

"An instrument or control board was installed in each boiler 




Fig. 62. — Instrument Board in an 8-Unit Boiler Room 

This board is described in text in details and in general features is similar to one 
reproduced on photograph Fig. 61. ■ It is installed in a hand-fired plant and not 
in a stoker-fired plant as preceding illustration. 



235 

room in a location readily seen by the firemen. Upon each board 
were mounted : 

(a) Steam flow meters, one piped to each boiler 

(b) A combination draft gauge, indicating draft in boiler 
uptake and furnace, and pressure in ash pit 

(c) A recording thermometer with two pens, recording 
temperature of feedwater entering economizer and boil- 
ers, respectively 

(d) An electric pyrometer connected to a thermocouple in 
each uptake, to indicate flue gas temperature. 

Adjacent to each board is^a Venturi feedwater meter, a gas 
collector and analyzer, and a portable recording flow meter. 
The draft gauges are piped to each boiler in such a way that 
through a system of valves operated by levers, the draft in 
uptake and furnace and the ash pit pressure can be obtained 
at once by pressing the lever corresponding to any boiler. 
Likewise, the temperature of flue gas may be read by making 
the proper electrical connection for any boiler by turning a 
hand wheel. The general arrangement of the boards is shown 
in Figure 62. 

The installation of instruments on a boiler control board has 
several unique features : 

(a) Steam flow meters only are individual for each boiler. 
All other instruments can be selectively connected with 
any boiler 

(b) Indicating instruments are used for the control and 
adjustment of working conditions of boilers 

(c) Recording instruments are employed for registering 
data necessary for computation of results. 

(d) Centralization of instruments reduces first cost — i. e., 
investment 

(e) Centralization of instruments also affords the observer 
or head fireman the opportunity to compare almost in- 
stantly the working of every boiler in the plant." (See 
Figure 62.) 

In the plants where no instruments were previously installed, 
the progress of their installation offers an exceptional psycho- 
logic opportunity for starting the educational work. A valuable 



236 

factor in teaching is the interest aroused in the subject and this 
is invariably the case when a new device makes its first appear- 
ance in the plant. Its purpose, mode of use and service-value should 
be explained before the instrument becomes a permanent fixture; 
if this moment is lost, the instructor has a doubly hard job, as 

men seldom have sufficiently keen interest in the old, familiar 
objects. Moreover, during the period of non-use or even mis- 
use, the instruments not only represent idle investment serving 
no purpose but create an impression of a senseless fancy on the 
employee and extravagant refinement on the employer. 

Securing the Knowledge 

Broadly speaking, there are two ways of acquiring knowl- 
edge. The first and most ancient method is based on belief in 
authority, either divine or human; it may be illustrated by the 
scholasticism of the middle ages and the method of teaching in 
our public schools. The second, as opposed to the first method, 
is based on the critical study of phenomena in accordance with 
the principles of scientific analysis. The entire progress of our 
life, the applied and pure science, is based on the proper use of 
this method as a tool. Since the modern or positive science 
accepts as the criterion of truth the exactness with which the dis- 
covered laws (or seeming relations between causes and effects) 
helps us to foretell the occurrences in time, space and effect, the 
difference between the applied and pure science is merely that 
of whether or not we can influence the phenomena at will. We 
can, for example, foretell the sun eclipse as precisely as putting 
out the light in our room, but the latter we may cause at will 
by turning the switch. 

Whereas the designers of the power plant equipment may 
justly be classed as engineers working on a scientific basis, in- 
asmuch as exact character of performance of this equipment is 
accurately predetermined by them before the drawings are sent 
to the shops, of few managers could the same be said. To accu- 
rately predetermine what results can actually be secured from 
the operation of a given plant appears to many as an idle 
quest, while some shrink before the task involving detail studies. 
Nevertheless wherever these possibilities are determined and the 
causes producing the most favorable results are clearly established 
such knowledge alone usually produces results far superior to 
those obtained before it was definitely known what might be 
expected from a given plant. 



237 

The degree of engineering perfection of power plants is generally 
reckoned in terms of thermodynamic efficiency. This criterion alone 
is both inaccurate and insufficient. It is inaccurate inasmuch 
as the inherent thermodynamic efficiency of the plant, as deter- 
mined by calculations or by experiment under ideal conditions 
of a test, is not necessarily attainable in practice, If, however, 
the expectation is derived from the observation of every-day per- 
formance, it is invariably short of possible perfection. These 
practical standards are usually too low, for fluctuation of operat- 




Fig. 63. — Instruction Diagram 
By referring to this diagram the switchboard operator, knowing from log the 
rise of water above dam per hour, can plan how many water wheels for how many 
hours and at what load he can run without drawing down the pond, and what 
portion of the load must be carried by steam turbines. 

ing efficiency depends upon the variable human element, mode 
of operation, etc. On the other hand the thermodynamic cri- 
terion alone is insufficient since the conception of thermal effi- 
ciency does not include the "time element' , which is the chief 
determining factor in our industrial, commercial and social lives. 
Furthermore to accept as a task the maximum thermody- 
namic efficiency of which the plant or each unit of a plant is 
capable, would be impractical : firstly, because it is unattainable 
and a certain gap between actual and ideal wipes out the definite 
distinction between the best possible and the good results; the 



2 3 8 

satisfaction by the accomplishment may come too soon, leaving 
large preventable losses unattended or else the expectations 
may be placed so high that attainment is impossible under the 
existing circumstances ; this would discourage the earnest efforts 
of operating force. 

Secondly the maximum thermodynamic efficiency is unfit 
to be a criterion of quality of operation because the securing of 
high thermal efficiency sometimes involves unwarranted ex- 
penses for its attainment or what is worse, may overtax the 
operators to an unadvisable degree. For instance, it might be 
possible to secure, under ideal test conditions, in a boiler instal- 
lation a thermal efficiency of 82 per cent. Yet to maintain this 
efficiency every day, may not be possible due to frequently or 
widely fluctuating load, and it would cost many times more to 
maintain these conditions than it is possible to save on coal. 
Again, we may find that allowing carefully for the effect of all 
influential factors we can maintain 74 per cent in every day 
operation. In this case any task set below 74 per cent would 
be a deliberate waste while to set it above this mark would be 
unreasonable as it may be reached only under an exceptional 
combination of favorable conditions, to duplicate which is be- 
yond the power of the operators. 

Mr. D. S. Jacobus, of the Babcock & Wilcox Company, has 
justly said that "a general impression prevails that test results 
are one thing and operating results another, and that the operat- 
ing results necessarily fall considerably below the test results. 
Operating results do as a rule fall considerably below the test results, 
but there is no reason why this should be so in the great majority 
of cases" (the italics are the author's). 107 

Indeed it is quite common to read in the reports of careful 
boiler testers passages like these : "... a different fireman was 
on duty. He fired the boilers and cleaned the fires in a different 
and apparently more efficient manner than the first fireman . . ." ; 
"the helpers do not realize the importance of coaling quickly and 
closing doors and it takes them longer to coal than to fire- 
men. . . ." Unfortunately, however, the old-fashioned way of 
conducting boiler trials and reporting on same totally disregards 
not only the factors of human skill and interest in the work, 
but even neglects to record such important physical conditions 
as the force of draft and velocity of gases through boiler, etc., 108 
thus rendering the entire report utterly without value as it does 
not point out the way for duplication or perhaps improvement. 



239 

The latest code of The American Society of Mechanical En- 
gineers for conducting boiler trials gives similarly unsatisfactory 
and antiquated rules, utterly disregarding such an important 
object of tests as setting task for everyday performance. Be- 
cause a locomotive can make 100 miles an hour nobody expects 
a train to get from New York to San Francisco in 30 hours, 
neither is the 20th Century Limited pulled by an old yard engine. 
In running boiler, turbine and other power plant tests similar 



670 27 



2175 




K30 

A.M. 



Fig. 64. — Log of the Test of Hydroelectric Plant 

Graphically illustrates the relation between the diminished effective hydraulic 
head (due to drop of water level over the dam and rise of water level in the tail 
race) and decreased capacity of the generating units. On the basis of such tests 
the pre-determination of available water power can be made, as exemplified on 
the diagram, Fig. 63. 

inconsistencies are unfortuately only too often made. Knowl- 
edge of how fast an engine can run does not tell a passenger 
when he gets to his station, likewise knowledge of maximum 
capacity and efficiency of plant equipment does not indicate what 
operating economy may reasonably be expected from a plant and 
what should be accepted as standard, all limiting factors being 
taken into consideration. 

From this standpoint all codes and rules for conducting boiler 
and engine trials are utterly unfit to guide the work of setting 
standards or tasks. The common shortcoming of all of them 



240 

is that they deplorably ignore the main point — for what are the 
tests made. 

The work of testing boilers, etc., is not infrequently conducted 
by young college graduates or sometimes by the boiler-room 
force, even in the plants of reputable companies. The data thus 
obtained are seldom reliable or complete and even if every fac- 
tor, however insignificant, is measured and recorded, the re- 
sults are of very limited value except when such a test occa- 
sionally discloses a serious leak somewhere so that steps may 
be taken to remedy these isolated causes of loss. To sum up : 

1. The time spent and expenses incurred in conducting tests 
by untrained persons is a pure waste and sometimes serious 
harm is done by wrong conclusions derived from such incom- 
petent tests. 

2 Tests that are made without keeping complete and con- 
tinuous records of all conditions should not be run at all, as 
the conditions cannot be duplicated and results cannot be 
checked at will. 

3 Tests that are not supplemented by time, fatigue- and mo- 
tion-studies on the men attending the units under the test are 
of limited value inasmuch as the most important factor is thus 
overlooked — namely whether under every day service it would 
be feasible for the men to duplicate the test conditions. 

4 No test, unless it is checked and verified by calculation, 
is of any value; moreover, any test, before it may be accepted 
as correct, shall be checked several times by repeat-tests of long 
duration to ascertain that the results once obtained can be dupli- 
cated at will. 

It is obvious that the task of securing complete and reliable 
information pertinent to equipment, supplies and men is a most 
exacting function of the management. It is more than testing 
of any one process of performance, or time study of any opera- 
tion. The influence of one or more variable condition on the 
possible result is extremely intricate but it appears still more 
complicated when one considers how many variable factors of 
both psychologic and physical nature must be accounted for in 
cases as complex as a modern power plant. Yet the difficulties 
are far from being unsurmountable and the number of sufficient 
observations is naturally limited by the amplitude of possible 
changes within its minima and maxima. 



241 



Nevertheless the nature of the work of obtaining necessary 
information, without which the management is but a haphazard 
undertaking, and the results but a source of either pleasant or 
unpleasant surprise, is such, that this work cannot be made a part 



30 60 600 




12 120 



II 12 

AM. NOON 



12 I 

MD.NT. AH 



Fig. 64^4. — Log of a Test 
Graphic log of a boiler trial, 2-600 HP hand fired, Edgemoor boilers, with 
changed grade of coal after six hours' run. 

of the duties of some power plant employee. The nature 
of this research work requires a man of very definite qualifica- 
tions and one possessing them is too valuable to be engaged 
in any routine work; again, it is hardly within anyone's ability 
to do justice to both research and executive work. 



242 

This work of securing a knowledge of what each unit of 
equipment individually and in combination can do and should 
do under everyday operating condition establishes at once the 
task and the practice. There is no need here to go into a detailed 
discussion of methods of testing and checking the results by cal- 
culation first of heat balance, next of cost balance and, finally, 
if apparently a satisfactory solution is found, by re-studying the 
problem from the viewpoint of human exertion required and the 
ultimate effect of newly devised practice on the welfare of society 
at large. A great deal of such information can be found in 
various textbooks and professional papers the subject was also 
touched slightly in the chapter on equipment. 

Time and motion studies should receive in power-plant work 
much more serious attention than heretofore. Engineers of the 
Taylor School devoted their attention to various manufacturing 
manipulations, construction work, etc., but utterly overlooked 
the manual work in the power houses. So far as operations 
such as shoveling or machine shop work are concerned the power 
plant hardly present any new problem, but in the boiler room 
and the high-tension room the field for this sort of studies 
is most interesting and abundant. Especially interesting re- 
searches should be made on the effect of the fatigue of atten- 
tion on the efficiency of processes. 109 

The old fallacious idea that the best man should be picked out 
for observations and the task set according to his best accom- 
plishment has long since been discredited. The industry cannot 
depend on exceptional men ; moreover such practice is psycho- 
logically wrong as average or even less skilled men, though 
capable of doing better work are thereby easily disheartened and 
soon quit trying. Furthermore management receives all the blame 
for their desire to "speed up" the work, lose the confidence 
and cooperation of the men and ultimately fall short of not 
only their unduly high aim but even of a reasonably moderate 
one, which could have been attained if another view on the 
matter had been taken. We have found that a hearty coopera- 
tion of workmen is invariably secured when men are picked 
out for studies and experiments from among the average if not from 
backward workers. Our desire being to help those who do poor 
work, we meet with quick and willing response from the first pupils. 
As soon as the new practice is devised and learned the results of their 
work are so obviously better than the work done by untrained men, 
who heretofore considered themselves superior to our pupils, 



243 

that they have to take notice of it. It generally does not take 
long until some of those outclassed men come to our instruc- 
tors with questions, for their trade-pride does not permit them 
to drag in the tail of the procession. In this manner the knowl- 
edge spreads rapidly, amicably and in a perfect spirit of co- 
operation, while the results depending on all, not on few men 
doing good work are more satisfactory. Furthermore a new 
practice introduced in this fashion becomes respectable and every 
newcomer instead of being told that this "system" is "bunk" 
and only few care to follow it, is at once impressed that doing the 
work in a certain way is a sign of respectability and good man- 
ners. The perpetuation of goodj>ractice is therefore assured. 

, ; - j 

Presentation of Knowledge 

When the mechanism and organization for securing the 
necessary knowledge is developed, the first step toward making 
this knowledge applicable is the presentation of facts, relations 
and all other information in a readily available form easily un- 
derstood at least by the leading men. The manner in which data 
and information should be presented largely depends upon the 
nature of the facts and modified as to form according to who 
and when is to make use of it. Four distinct ways are most 
commonly used: 

1 Diagrams, graphs, charts, tabulations, etc. 

2 Slide rules 

3 Instruction cards 

4 Anunciators, indicating scales, light or sound signals, etc. 

Information presented in the graphic form of diagrams and 
curves is handy for use by engineers, switchboard operators, 
and like people of some technical training who know how to 
read curves on the scale. It is conveniently adopted to repre- 
sent certain final relations omitting intermediary conditions over 
which these men have no direct control. A fair example of 
this type of reference is given in Figure 63 which represents the 
summary of a large number of tests, graphically reported in 
Figure 64, and giving instantaneous information as to what 
output may be expected from water wheels during the next 
twenty-four hours on the basis of the rate at which the water 
level raises above the dam. Adverse and favorable conditions 



244 

of wind, rainfall, etc., are accounted for within the shaded area 
of diverging lines. Knowing from the log record that the water 
run off is at a certain rate the operating engineer reading off 
from the scale on diagram for the corresponding rate can accu- 
rately plan how many water wheels should run and for how 
many hours without lowering the level of the pond below the 
safe mark and how many hours it will take to build up the 
pond. Similarly, Figure 65 represents the relation between the 
steam-turbine load and corresponding permissible steam con- 
sumption. 

Whenever there is a number of variable factors entering into 
consideration it is extremely difficult for an operator to exercise 
proper judgment from a graph like Figure 66 or loosely worded 
instruction card without going every time into more or less ex- 
tended calculations. This is neither desirable nor even possible 
in cases of economical distribution of fluctuating load among 
several generating units. In such and similar cases carefully 
prepared slide rules are of great help. Their use is readily taught 
load despatchers or switch board operators. A simple example 
is shown in Figure 67 which illustrates a steam consumption 
calculator devised for determining the most advantageous dis- 
tribution of total load among three turbogenerators of 2,500 kilo- 
watts, 750 kilowatts and 500 kilowatts each; the water rate of 
larger unit was shown on the diagram Figure 25. 

For men employed in doing repeated manual operations a 
common form of written instruction card may be advantageously 
used. It goes without saying that such instruction cards are 
seldom referred to after the men are trained by an instructor 
and the proper habit of working formed. The fact that some 
of the men could not read is by no means a handicap as any- 
one has to undergo a period of training during which a com- 
petent instructor actually demonstrates the motions and their 
sequence, performing the work according to the instruction card. 
Samples of such instruction cards for the use of foremen are given 
in Figures 68 and 69, while Figures 70 and 71 show those prepared 
for the use of coal passers. 

The most convenient and successful form for giving the nec- 
essary information to the men working under variable condi- 
tions is some kind of indicator or signal either acoustic or optic. 
In case of hand firing it is sometimes possible to so measure 
the amount of water fed to the boilers, that every time a 
certain quantity is "dumped in" a gong rings announcing that a 



245 

certain amount of coal must be thrown into the furnaces, thus 
not only regulating the frequency of firing but also helping to 
maintain a desired ratio of coal to water. For the purpose of 
informing firemen as to thickness of fuel bed and strength of 
draft required for securing maximum efficiency, at any rate 
of steam-flow, additional marks can easily be placed on the 
flow-meter dial. In the author's paper on task setting for fire- 
men and maintaining high efficiency in boiler plants, 110 the 
following description of a similar "fireman's indicator" is given : 
"The writer arranges on the dial of the steam flow meter an 




6 7 8 9 



10 II 12 B 14 15 16 17 18 19 20 21 22 23 24 25 26 27 25 29 30 31 31 
THOUSAND KILOWATT HOURS OF 6 HOURS OUTPUT 



Fig. 65. — Instruction Diagram 

Operating engineer by referring to this diagram can judge how much steam is 
allotted to an 8-hour watch depending upon the steam electric load carried. The 
allowance between the curve "steam consumed by generators" and "task" curve 
is made to take care of ordinary fluctuations in quality of steam and provides 
leeway for various combinations of auxiliary machinery. 

inside dial, as shown on Figure 72, with numbers indicating 
the required thickness of fuel bed corresponding to the number 
of pounds of steam drawn from the boiler and a third dial with 
numbers indicating the draft which is necessary and sufficient 
to supply the required quantity of air for the combustion at a 
rate called for by the indicated steam demand. Thus if the 
pointer, as on the figure, shows that (at any time) steam is 
flowing from the boiler at a rate of say 14,000 pounds per hour 
the firemen will know that the figure 4 under the pointer on the 
middle scale means that a draft of 0.4 inch of water is needed 
and the location of the pointer on the inner scale between the 
numbers 6 and 7 calls for a thickness of fires of from 6 to 7 
inches." 



246 



Acquiring the Knowledge 

While such facilities for transmitting the information to 
the operators are absolutely essential they can not be of any 
material help unless personal instruction and training is ren- 
dered. The best qualified instructor is usually the foreman or 
an ambitious and intelligent worker — never an office man. An 
instructor must not only be a well-informed man but a skilled 
one in the art and actually able to do the high-class work from 
day to day. The surest way to discredit the attempt to teach 
men a better way is to place it in charge of a man who may be 
suspected of "bluffing" ; such a folly is equaled only by trusting 
the training to a man though capable but inclined to "bully" 
his charges. 

The following conditions, in the writer's experience, are es- 
sential as incentives for men to learn a new mode of doing 
their work: 

1 Management should place itself at the service of men to 

assist and help them in performing their work 

2 Close personal relations between workers and all mem- 

bers of managerial staff 

3 Store room, tool room and maintenance department or- 

ganized to help men to do their work with ease 

4 Thorough understanding of mutual aims and establish- 

ments of fundamental principles underlying organiza- 
tion and cooperation 

5 Accurate record keeping adequately representing con- 

dition of work 

6 Full confidence on the part of the employees as to cor- 

rectness, feasibility, and desirability of the new methods 

7 Payment of secondary wages for meritorious work 

8 Immediate reports as to results accomplished, individual- 

ized as far as possible and made known to the men 
before they return to work the next day 

9 Following up of any failure to do good work and ex- 

planation to men of causes thereof 

10 No authority without full responsibility. 

These ten fundamental rules of conducting the plant constitute 
the administrative policy which, being thoroughly democratic, 
has proven far superior to any form of centralized management. 



247 

The acquisition of superior skill under this regime is as bene- 
ficial to society, because of better service with greater economy 
in natural resources and human power, as it is to individuals 






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engaged in the industry. This benefit is derived by them not only 
as members of the community receiving better and cheaper service, 
but in a most direct and immediate way in the form of increased 
compensation commensurate with increased value of their serv- 



248 

ice. Moreover, training affords them the development of a 
higher skill and better understanding of industry with conse- 
quently increased opportunities for desirable employment. 

In this connection it is pertinent to refer to an old unfortunate 
term of "transfer of skill" as used by the committee of The 
American Society of Mechanical Engineers investigating the 
science of management and by Professor Malcolm Keir whose 
essay on the subject is an amazing mixture of deep foresight 
and ignorance of some phases of the subject. The vulgar 
conception is that the "skill" is in some clever manner taken 
away from workmen possessing it and "transferred" to the ma- 
chine or to the owner of the machines. Such error is chiefly 
based on old, undefendable fallacy that the efficiency of an auto- 
matic machine is independent of the operator while in reality 
this doctrine is chiefly responsible for most of the indus- 
trial mismanagement and waste of natural resources. Any 
course of apprenticeship indeed, whether conducted by a guild, 
trade union, or employers, does "transfer" skill from the master 
or instructor to the apprentice. There is nothing novel in "scien- 
tific management" so far as it adopts the plan of vocational train- 
ing with reward to those who learn. On the other hand, of any 
mechanical invention, whether that of Gutenberg or Lilienthal, 
it may be said that it transfers the skill of a penman or of a 
bird to a printing or flying machine, accomplishing the aim 
in a far superior way. Yet in such a transfer the elements pecu- 
liar to "scientific" management are notoriously absent. Curi- 
ously enough the scientific way of training men under a new 
mode of management begins with skepticism as to the very 
existence of such skill in workman's possession. Indeed, when 
tests and studies are made, they usually disclose that most 
of the processes, tools, motions, and habits of doing things are 
not skillful, that they are based on an imperfect knowledge, 
wrong training, and unfit traditions surviving from the times when 
means and methods were vastly different, by now obsolete and 
usually limited to individual experience, lacking broad knowl- 
edge, etc. Then the scientific research leads to improvements in 
method, based on an accurate knowledge of facts, such as the art 
of cutting metals devised by Dr. Taylor and his associates, or 
brick-laying of Major F. B. Gilbreth, or our methods of power 
generation, etc. Thus it is not the existing skill but a new 
superior skill that is developed and made use of in the application 
of science to industrial management. Hence, it is absurd to 



249 

talk of transfer first, because this skill was not in existence but 
newly developed, and second, because it is not possible to trans- 
fer a non-existing thing to someone. A more correct position 
would be to admit that the imperfect, casual, and scattered skill 
of the art is perfected, and the knowledge of how to do the work 
is bound and supplemented by an understanding as to why. 

The role of an expert in this case is changed from that of an 
augur, closely guarding his trade secrets, however fallacious and 




Fig. 67. — Steam Consumption Calculator 
Hourly steam consumption of turbines varies as product of load (Kw) and 
water-rate (lbs. Kw). With two or more units total load may be distributed so 
that more or less steam will be used for the same output. In order to determine 
distribution of load among several units most economically without lengthy cal- 
culations special calculators may be prepared for any plant. 

imperfect, to that of a leader who enjoys an authority of one who 
knows what to do and how to do it. His work benefits the com- 
munity and brings him a higher reward than his privilege of 
keeping secret his knowledge can possibly do. The inconsistency 
of this theory of transfer of skill, frequently used by ignorant 
or unscrupulous writers and speakers to prejudice labor against 
the advancement in art and technique, is particularly pronounced 
in the power-plant work. The work of the best skilled stoker 
unaided by instruments and scientific training is hardly any 



250 



thing more than a rude guess and his skill is limited to mere 
dexterity and alertness in shoveling coal into the furnace and 



Form'SA88T 6-0 4-8-13 



INSTRUCTION CARD 



Account No._ Order No.. 



.Sheets. 



5)0 be done byi Fivem&n D er&rtasnt a Eleotrio Panted Daily 
For Gordon-Falton Broad Top Ooal Only, 



Load 1200KVV. 1450KW. 1 17502W, 2000KW. 2300KW. 280QKW. up 

Draft at uptake *S5 .40 .45 .55 .62 .71 

Thickness of fires 6" 7" .7" 8" 9" 10" 

Shake grates every 2 Hrs. !>r hr. 1% hr. 1 tar. 40 min. 30 min. 



D'E 7 A I L 3 

1. After shaking grates 9 take eoraper, push fires to the rear lift and take out scraper 
without touching fires, throw green coal in front to required thickness, spread 
lightly in the rear. 

2. Fuel bed mast be level all the time. 

5. Clean fires every 12 hours on load less -than 2000 E9« 

4* Clean fires every 6 hours on lead more than 2000 KW. 

5, Throw ooal in fires every time the bell rings. 

6* Only one fire door can be opened at a time in the boiler room, 

7» Right proportion of coal - one v-heelbarrow to one watei" weigher dump. 

8* Feed continuously; not from time to time* 

9. On sudden peaks allow water level to go to the lower mark. 

10. On light loads keep water level at upper mark. 

11. When shifts are changed have water level on, middle mark. 

12* Blow down boilers by opening blow-off valves slowly and dosing also slowly allowing 
2 minutes per boiler. Start 11x30 P.M. 

13. Blow soot at 5i30 P.M. 5i30 A3, and 12 noon. Follow special instructions. 

14* Blow Off superheaters every Monday at 8:00 A ja. 

i5i Report on duty dailyt 6:65 A.1I. 2i53P.M. 10,53 P.M. 
Leave duty daily.3.00 P.M# lltOO P.if. 7:00 A.M. 

COHDITIOKS 

1. Task means following ezaotly the above instruction; efficiency will be 71$. 

2. Banns Is paid 25% of hourly rate if task is lived up to. 

3*. Bonus le forfeited If steam pressure fropa below 165 pound square inch. 

4* Report at once anything that is in the way to earn bonus if not reported no bonus 

mil be allowed. 



Fig. 68. — Instruction Card for Firemen 
Method of firing, strength of draft, frequency of slicing, shaking or removing 
clinkers, etc., vary not only with the rate of firing, i.e., load carried, but with grade 
of coal used as well. The above card was prepared for hand-fired Edgemoor 
boilers of ioo sq. ft. grate area. 

pulling out ashes and clinkers. He may be able to maintain 
steam pressure and evenly feed water into boilers, but all that 
saves no coal, no miners and railroaders work, does not reduce 



*$t 



cost of living and certainly does not reduce his own hardships. 
The transfer of such "skill" from an old timer to a green man 
takes a long time and when completed both men waste the 
fuel at an equally appalling rate as compared with the possi- 



Form 8A.8ST 6-0 4-9-12 



INSTRUCTION CARD 



To be done- by i FIRBiEN In Power Plant De^t: Eleotric Wanted Dally 

1 # Carry even load on each boiler In the neighborhood of 10,000 pounds of steam 
flow per hour, banking one boiler, if necessary, to secure the desired load 
on each unit. 

/ 

2. Use ooal in mixture of five parts Qf^anthracite buckwheat #3 and one part 
bituminous run of mine. 

3. Peed water evenly permitting extra gauge when the load drops and allowing one 
gauge, below normal in case of sudden pick. 

4. Fire at the rate of eight to ten shovelfulls spreading same ovonly over fires, 
starting from rear and covering the edges of the grates and all blow-holes. 

E, After each firing look at the instrument board and adjust, if necessary, the 
damper draft and ash pit pressure' according to table for observed rate of 
steam flow, liaintain in furnace balanced draft as near as possible. 

6, Regulate conditions as follows i 

WHE2U Flow per boiler is 8000 9000 10000 11000 12000 pound/hour 



(Ash pit must be 


1.2 


1.4 


1.5 


1.6 


1.8 


THEN (Damper must be 


0.03 


0*04 


0.05 


0.08 


0.10 


( Fuel bed must be 


3" 


4.1 


5" 


6" 


7" 



7* Levelling fires before firing, if necessary, shall cover blow-holes or 
puffed spots, don't plow or mix coal strata. 

6, Rocoid the rssdinga every half hour on the boiler house log. 

9* Rsvar allow t-ha eteam pressure to drop below 140 pound square inoh. 

The abt-ve coatfit&ons shall constitute the firemen's task in addition to such 
regulations as t'o hours cf work, otcu as covered by special instruction. The 
efficiency is szpsetad to be 7r.js or mora. 



Fig. 69. — Instruction Card for Firemen 

This instruction card was prepared to cover certain conditions in a plant with 
hand-fired vertical Manning type boilers. The instrument board in this plant is 
shown on Fig. 62. 

bilities demonstrated by firemen scientifically taught to work 
efficiently. 

Still another consideration merits brief reference. The in- 
troduction of automatic machinery to which the designers passed 
their skill does not obviate or even diminish the demand for highly- 
skilled attendance. ' Contrary to this illusion, the more automatic, 
more complex and delicate is the piece of mechanism the more intelli- 



252 

gent and skilled must be the maintenance man, the electrician, 
millwright, the mechanic and the operator. An expensive mech- 
anism trusted to a "cheap" man fails to render full value; an 
automatic stoker taking place of hand firing invariably wastes 
more fuel unless is operated by highly trained men, and not 
infrequently in larger stations these are college graduates. 

Again, the fear that new mechanical devices will cause suffer- 
ing to the working class through denial of employment to less 
skilled common labor is even less warranted than the similar 
feeling during the last century against the introduction of ma- 
chinery. In America unskilled help has always been scarce and 
mostly imported by large corporations who taking temporary 
advantage of the foreign exchange made meager wages in dol- 
lars appear attractive in lires, crowns, or roubles, while now 
with export exceeding the import of "common" workers they 
are already at a premium. The advent of linotype, laundry ma- 
chinery and particularly electric trolley cars and automobiles 
definitely dismissed unfounded concerns as to the fate of replaced 
labor. The stable men, the manure handlers, wagon and har- 
ness makers lost their jobs only to be reemployed, together with 
many more, as car builders, automobile mechanics, garage men, 
central station and oil refinery employees, chemical workers, etc. 
New jobs and trades sprang into existence paying better wages 
and offering shorter hours and better conditions as compared 
with discontinued occupations. The chauffeurs of today would 
scoff at an offer of a position as a coachman. 

The deep significance of this process of "transferring skill" lies 
in the fact that this transferring is going in both directions: from 
universal labor and generations of dead engineers and scien- 
tists to cooperative living labor which means cooperation of 
scientists with workers and reverse. While the theory is 
modified by experience, the experience is peeled off from the 
crust of old traditions, habits, fallacies and customs of the 
trade, which were inherited from times when means and condi- 
tions of work were vastly different. This standardization of proc- 
esses is comparatively a new conception and care should be taken 
to avoid an illusion that standard method is something permanent 
and unalterable. 

Method is a mode of action, it is a living thing and as such 
is subject to constant development and modification. With 
each change in surrounding conditions, appliances and materials 
used, new discoveries made, etc., the method of work or opera- 



253 



tion should be revised and modernized. As soon as this prin- 
ciple is lost sight of, the whole organization becomes a dead 
"system" and a plant carrying it to a letter is like Rip Van 
Winkle falling behind the time while the world moves on. 
While the plant office is the custodian of all knowledge avail- 
able, the study-man in cooperation with the entire force is keep' 
ing vigilance on every possible progress and modifies the prac- 
tice as and when conditions and requirements change. 



fit<w£ 



DETAIL OPEP^TIONS^- 



i^oCtAM^ha 



S«/CAED No.. Zlitr- 



OPERATION fe^OMJ. Co-oJL 



OPERATIVE yyl.'jv) 



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SEE SKETCH CARD NO. 



SUMMARY 



TOTAL NO. OBSERVATION 



*r 



MINIMUM TIMES 



TIME NECESSARY 



VT 



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Fig. 70. — Time Study Sheet (Front) 

One of a large number of time studies made to study the job of coal passing. 
Shovel used is shown on Fig. 54 (right) ; wheelbarrow of special design holds 400 
lbs. coal net; when lifted throws 115 lbs. on arms (58 each). On basis of such 
repeated observations, instruction card for passing coal (Fig. 71) was prepared. 

With the preparation of clear and complete instructions, 
the work of mastering the processes is not completed — it only 
really starts at this moment., To assure the proper use of knowl- 
edge and living up to instructions prepared, the training of em- 
ployees and stimulation of interest should receive full share of 
attention. Inasmuch as the least skilled and most backward 
men should require more help from instructors, in order to bring 
the level of efficiency up to the standard, it has been found benefi- 
cial to reward this spirit of helpfulness by special recognition 
to instructors. To that end the instructor receives over and 
above his salary an extra remuneration for each man who learns 



254 

to perform the work with the predetermined degree of efficiency, 
and double reward for every man under his instructions on the 
days when all men live up to their tasks. 

The value of a careful, systematic and prolonged training 
of the employees cannot be over-emphasized. The most diffi- 



FORM NO 

...J., sheets GENERAL INSTRUCTION CARD 

SHEET NO ..I DISTRICT DEPARTME 






ORDER NO. 


;nt 


OPERATION SYMBOL 


DESCRIPTION OF OPERATION Passing Coal from Coal Bin to Front of Boilers in 
4001b. Wheelbarrow on Concrete Floor 

6.42 A.M. 3.00 P.M. 

2.42 P.M. 11.00 P.M. 
TO BE STARTED tOJ-? R M. TO BE COMPLETED 7.00 A. M. 


YEAR 


MONTH 


DAY 


SIGNED 
W.N.R 


. 13 


10 


13 


CHECKED 


ITEM 


DETAILED INSTRUCTION 


Unit Time 


T 


me Allowed 


/ 


Get Shovel, bna ■ Handle. 21.5 lb. Capacity 






2 


Get Wheelbarrow, 4001b. Capacitu 






3 


Check the Scales, get the Report Sheet and Pencil 


4.00 M/n. 




4 


Open the Door of your Coal Bin 


2.00 » 




5 


Place Board to Slack Coal for Next Fireman 


0. 13 » 




6 


Shovel Coal in Wheelbarrow 


/ . 25 ♦• 




7 


Lift Wheel barrow on Scale 


0.12 « 




8 


Weigh buDroppinq or Adding Coal 


0.33 " 




9 


Wheel to Front of Boiler 


0.16 » 




JO 


Dump and Lift Pihee I barrow 


0. 10 » 




II 


Wheel Back to Bin 


0. 18 » 




12 


Total Time per Wheel barrow, wifh 20% for Incidents 


2. 55 »• 


45Min. 


13 


After IS Wheelbarrows De/ivered, Rest Silting 


10. 00 » 


55 » 


14 


Pass 10 Wheelbarrows per Above Detail Instruction 


25.5 » 


iHr 


20 « 


IS 


Rest Silting 


10. » 


l» 


30 •» 


16 


Pass 8 Wheelbarrows as per Above Instruction 


20 '• 


/" 


40 >> 


17 


Rest Sitting 


10.0 » 


r* 


50 » 


18 


Pass 8 'Wheei 'barrows gs per Above Instruction 


20. » 


2" 


10 » 


19 


Continue Above Operations until enough Coal is Passed 


Same A If owe 


ince 


20 


Sweep Floor, 6ei Tools in Shape, Lock ffin Door, 


10.0 *■> 




21 


Return the Keu of the Bin and Report to the Office 


IV. '* 




22 








23 


Task is accomplished when within 8. Jhrs all Coal 






24 


Needed is Passed without Delays for Firemen's Work 






2S 


and Instruct/on Observed 






26 


Bonus is Paid Over and Above Dau 7 Rate ItperiOOOib. 






27 


of Ccal Passed During the Shift if Accuracy of Reports 






2d 


is within 2% of Railroad Weight. 














THE ABOVE WORK COMPLETED AS DESCRIBED ABOVE 


Sgwd&fl22&ZA^' 



Fig. 71. — Instruction Card for Coal Passers 

Periodic rest sitting is a necessity for conserving human energy and pre- 
venting fatigue. The above instruction card is prepared on the basis of time 
studies similar to that on Fig. 70. It was found easier to deliver 65,000 lbs. of coal 
in 8 hours than 45,000 lbs. of coal in 12 hours. 

cult part of this work is breaking the old habits. The restraint 
from the habitual actions often makes the employee nervous 
even if he is thoroughly convinced of the advantages of the 
new method. If, however, the new way appears to him as an 
unreasonable fancy of his superior, who failed to make it clear 
to him that the change is reasonable and to mutual advantages, 
the strain on his nerves caused by both suspicion as to the 



255 

outcome and concentration of mind on unfamiliar actions may 
take the form of concealed sarcasm or even assume an unfriendly 
attitude. It would be manifestly erroneous to think that the 
job of an instructor is a temporary one. It is as permanent as 
the plant itself, inasmuch as men, supplies, conditions and re- 
quirements gradually change; new investigations should be car- 
ried out, and to meet the changing circumstances the manage- 




Fig. 72. — Firemen's Indicator 

With variable steam demand and constant area of grates the rate of combustion 
should be changed with the rate of steam generation. To maintain at the same 
time uniformly good economy, the thickness of coal on the grates and the amount 
of air needed for complete combustion should be adjusted in a definite relation. 
The instructions to that effect are given by placing corresponding additional 
scales on the dial of the steam flow meter. Similar arrangements are devised for 
mechanical stokers or fuel oil atomizers. 



ment must convey the revised information to the men, con- 
stantly making available the gain in knowledge. 

In the preceding chapter, the task was defined as doing the 
work in the best devised manner as opposed to the old con- 
ception of a task as a request to accomplish the most work. 
Taylor himself had to admit that his "tasks were all purposely 
made so severe that not more than one out of every five work- 
men could live up to it." Contrary to this our quality tasks 



256 

are set so that anyone, unless he is physically or mentally dis- 
qualified for the work, can accomplish his task with compara- 
tive ease. Obviously in power generation quality means vastly 
more than quantity, hence the paramount function of administra- 
tion is the training of employee not only in proper methods of 
work and forming better habits, but particularly in teaching 
the scientific rudiments and principles, clear understanding of 
which is so essential for intelligent performing the work. It 
is therefore the task of the management to offer the employee an 
opportunity to do the kind of work for which the man has in- 
clination and is fitted; next, to provide means and surroundings 
that facilitate the work and assure the possibility of good re- 
sults ; and finally to assume the full responsibility of seeing that 
the work is properly performed. In practice it means : 

1 Helping the employees to acquire correct and useful 

knowledge 

2 Helping the employees to cultivate the habit of doing 

good work 

3 Rewarding the meritorious work. 

Progress Due to Training 

The opportunities for conserving human efforts and natural 
resources, realized through a careful training of workers in per- 
forming their function in the proper way, can be correctly esti- 
mated from a review of a few typical instances. No man with- 
out thorough and prolonged training can acquire the new habits, 
and it is really the habit of work and habit of new way of think- 
ing that shall be aimed at in this work. We may know the 
truth, we may be convinced of it yet, if we are not in the habit 
of practicing it — all wisdom and truth is of no avail. It is uni- 
versally conceded that the good results obtained during the 
boiler tests are never, or only seldom, duplicated in the every- 
day practice. Yet, if the conditions of load and service during the 
test were normal working requirements, there is no other reason 
for results falling short but the failure of the regular crew to 
carry on the work the way it has been done during the experi- 
ments. Many may be the reasons for it: lack of means, knowl- 
edge, incentive, etc., but the fundamental and the most com- 
mon one is the failure of the management to assist the men 
until the new practice becomes second nature with them. The 



257 

results of this aptitude to expect good results after hurriedly- 
starting men on work as per instruction card are sometimes very- 
harmful and may bring the whole work into disrepute unless 
quickly discovered and mistakes rectified. 

The following quotation from a report made on the case in 
question is self explanatory : "180,000 pounds of coal were 
handled by four men in 24 hours. Two men working together 
12 hours each day and passing 45,000 pounds each, could not 
stand the work; it was too hard. This was because the shovel 
had a short handle and they had to bend too low; the shovel 
held only 16 pounds of coal instead of 21.5 pounds causing the 
workman to bend too many times per ton; the wheelbarrow 
held only 250 pounds, causing too many trips. When the man 
was given the right kind of a shovel and wheelbarrow holding 
400 pounds, yet throwing less weight on his arm when lifted, 
he handled 65,000 pounds in 8 hours (instead of 45,000 in 12 
hours) and found his job much easier than before. This man, 
however, was left to himself before the new way of doing the 
work formed a habit with him. In a short time he came to us 
complaining of fatigue and refusing to continue the work. We 
started to watch him again, and the trouble was clear. He did 
not observe the instruction card. This card ordered rest every 
so often, for so many minutes, sitting. Instead, the man worked 
much longer at a stretch, thinking that longer rest afterward 
would refresh him better, and when resting he spent the time 
standing and chatting to a fellow worker and not sitting as 
prescribed. That was enough to cause fatigue. The rest of the 
gang of coal passers at Warrior Ridge were finally put on the 
task in the proper manner, and no complaint has since been 
heard, while their health and spirits markedly improved." (See 
Figure 71.) 

Still more serious mistakes can be made by the management 
failing to appreciate the value of improved work of men. Once 
the operation is studied a new method of performing the work 
discovered and its advantages evaluated, the men should share 
in the benefits accrued from their additional skill. The men 
know just as well as the management what their additional 
skill is worth for they keep pretty accurate check on the 
amount of coal used for carrying certain load. If as a result of 
better work and closer attention on their part they succeed in 
saving a few tons of coal, they know that while in a measure it 
is due to the facilities and instructions provided by the man- 



258 

agement the saving came ultimately as a result of their own 
skill and good will. They are entirely willing to divide the sav- 
ings in some equitable manner but it is unreasonable to ex- 
pect them to stand for any thing short of fair play. 

An instructive occurrence happened in a New England mill- 
plant illustrating the reaction of men to an attempt to cut their 
"quality-bonus" or secondary rate paid for extra skill, down to 
a figure unreasonably meager in comparison with the saving in 
fuel resulting from their efforts. The history of the case can 
readily be seen from the bonus record reproduced in Figures 
73, 74 and 75. Upon the completion of tests and experiments, 
covering in total thirty-three boilers and furnace tests with 
various available fuels, under different modes of firing and car- 
rying various loads, a definite practice was devised and ac- 
cepted as standard. Following the prepared instructions would 
result in a 72 per cent boiler and furnace efficiency, or higher 
if there was an unusual combination of favorable conditions. 
On September 30, 1917, the actual training of firemen was started 
and the record of their accomplishments was kept. As some 
of the men participating in the research work already had a 
clear understanding of the new method the progress was very 
rapid and results quite gratifying, the efficiency averaged 74.3 
per cent for four weeks, and 63.8 per cent of all the men in the 
gang succeeded in doing meritorious work as shown by the black 
squares on the record; the thin lines indicating dangerously low 
efficiency (below standard). On October 1, 1917, it became 
known in the boiler house that the management had decided 
to pay a smaller secondary rate for extra skill (40 cents per 
day to head firemen and 30 cents to helpers instead of 60 and 
50 cents as it was originally understood.) A decided disappoint- 
ment was at once manifest, the men lost interest in the work, 
respect for the management and rapidly returned to the old 
manner of tending boilers with resulting efficiency sliding down 
as low as 66.5 per cent which was about the average figure of 
the preceding year. When questioned as to the motives of this 
deliberate neglect an old Y'ankee firemen readily gave his ac- 
count. "The company," he said, "struck a bargain with men where- 
by they had agreed to save seven wheelbarrows of coal per 
shift for 60 cents; the men learned how to do it; now the com- 
pany is a quitter, does not keep its word and need not be 
treated better than a yellow dog." 

The management, after fourteen weeks, realized their blunder; 



259 



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262 

a saving of $50.40 in bonus during this time cost them about 
$2,275.00 in coal and the respect of nearly all the men. In 
January, 1918, the bonus was reinstated as agreed and the 
record reproduced in Figure 74 shows that the men quickly 
responded and cooperated with the engineering staff in main- 
taining uniformly high efficiency averaging thereafter about 74 
per cent. Figure 75 shows the record of the same company and 
the same head firemen more than two years after. 

Still another rock on which the conservation campaign can 
easily be wrecked is the lack of cooperation on the part of man- 
agement in maintaining the equipment in first-class operating 
condition. A large power plant, whose upkeep was entrusted 
to an old-fashioned master mechanic, taking care of all other 
departments of the concern as well, was run on the principle 
that no money shall be spent for maintenance until something 
broke down. When better operating methods were inaugurated 
assurances were made that the maintenance service would be 
carried according to our schedules. This, however, was delayed 
for several months and meanwhile the efficiency of operation 
gradually improved by the splendid cooperation of operating 
force. Figure 76 indicates this gradual improvement which, how- 
ever, after reaching a point short of possible perfection, rapidly 
collapsed due to utter neglect to keep up the equipment in 
proper repair. In six months of supreme efforts and hard work 
the efficiency could not be brought above 57 per cent in a poorly 
maintained plant. It took four months to organize store-room and 
repair service and within next four months the efficiency was easily 
built up from 48 to 67 per cent. After several months of extensive 
repair work finally carried out in compliance with our schedules, 
work has resumed and the operating records reproduced in Figure 
77 y show the level of efficiency finally attained. 

Whenever the plant administration accepts its share of re- 
sponsibility and properly performs its duty to provide proper in- 
struction and training to offer adequate compensation for skill 
over and above the time paid for, and to keep the equipment as 
well as all other material and physical condition fit for work, 
then the results forthcoming are gratifying to all concerned. 

In this connection a few actual cases may well serve to prove 
the statement that correct understanding and intelligent master- 
ing of processes increases productivity of existing equipment, 
reduces waste and consequently expenses, and, among other re- 
sults, increases value of labor, reduces fatigue or length of work- 



263 



ing day, provides interest in occupations, introduces greater 
safety, and ultimately reduces the cost of production, thereby 
rendering a manifold service to the community. 

A characteristic case was described in the following report of a 
general works superintendent to the president of a company who 
adopted in their plant our principles and for some time practiced our 
methods : 

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"EFFORTS WERE MAiX 
TO INCREASE OPERA TING 
EFFICIENCY BUT DUE TO 
HESLECTED MAINTENANCE 
IN THE PAST ONLY LIMITED 
PROGRESS WASMADE. 



pUSSE&UENTLY THE 
OPERATING 

EFFICIENCrmS 

INCREASED FROM 
{ £2 PERCENT A VERA6E 
FFICIENCYT067 
ER CENT EFFICIENCY 
EFORE TASK WAS 
ET AND BONUS 
'AS OFFERED 

'ONE DETERIORATION OFwMm 

'EFFICIENCY INTHE PLANT IN W/y 
\PQOR REPAIR WAS SO RAPID THAT'* 
■THE WORK WAS SUSPENDED AND i 
■MAINTENANCE W0RK0R6AMZED i 
T0PUTTHE'<^1 g 

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OPERATING; 




APR. MAY JUNE JULY AUG.SEPT. OCT. HOY DEC JAN. FEB. MAR. APR. MAY 
19}7 !91d 

Fig. 76. — Effect of Poor Maintenance on Plant Efficiency 
For six months the efforts and gained knowledge of men gradually improved 
plant's thermal efficiency from 46% to 57%. Neglected maintenance brought 
about the collapse of efficiency and it took another six months to recommence the 
progress. Compare this case with a case of a public utility plant, the maintenance 
of which was also neglected and eventually caused shut down (Fig. 36). 

"It is only fair at this time to call attention to the fact that the 
first fundamental of electric power, and all other power costs, has 
been very materially improved in the last year, namely, steam gen- 
eration. 

"Steam generated as related to coal burned is the one fundamental 
consideration in any power plant. Our coal utilization charts from 
October 22, 1918 to date show a steady improvement in obtaining 
more steam with each pound of coal. During the period, November, 



264 

1918, to February, 1919, the estimated loss, or amount below this 
figure was more than 100 tons per week, or $2,400.00 per month at 
present prices. This loss is now entirely eliminated and records 
show an even better evaporation than the standard set. 

"When the fact is taken into consideration that in the early part 
of 1918 we were paying $3.98 per ton delivered for coal, and that 
to-day our contract calls for a price of $5.15 per ton delivered, it 
can be seen that even in the item of our principal raw material 
our cost is 30 per cent higher than under war conditions. During 
some of the latter months of 1918 our coal cost ran as high as $6.69 
per ton delivered, on account of war conditions. 

"During the first fifteen months the market price of power 
plant house labor has been increased slightly more than 50 per cent 
as follows : 

Date Firemen Helpers Laborers 

March, 1918 33-35 cents 30 cents 27.5 cents 

October, 1919 52-53 cents 45 cents 43.0 cents 

Increase 53 per cent 50 per cent 56.5 per cent 

"In spite of the increases in these two principal items our unit 
cost per 1000 pounds of steam for the last three months has averaged 
less than 50 cents per 1000 pounds of steam for the first time since 
we commenced to keep records of steam generated. When it is 
borne in mind that this has gradually been reduced from a high cost 
of $1.11 per 1000 pounds in December, 1918, it can be seen that 
the improvement has been marked. It might be noted here that 
this cost included all the costs of generating steam and transforming 
it into various forms of energy in which it is sent out from the 
power house and represents the total monthly cost of the power de- 
partment divided by the total steam generated. 
"The comparison for 1919 is as follows: 

Cost Per 
1919 Total Cost Total Pounds 1000 Pounds 

Steam Steam 

January $24,096.27 25,381,000 $0,951 

February 22,345.38 23,400,000 0.953 

March 21,895.90 24,571,000 0.693 

April 18,985.95 29,741,066 0.637 

May 16,340.47 26,900,000 0.572 

June 18,142.36 26,476,000 0.685 

July 16,987.25 36,127,000 0.468 

August 18,985.40 36,066,000 0.525 

September 16,384.33 33,527,000 0.588 



265 




266 

In other words, in spite of increased cost of coal and other material, 
over 50 per cent higher wages per hour and from 60 cents to $1.75 
bonus paid on top of the day wages, more than half of the expenses 
of power production were eliminated since formerly they represented 
pure waste. At the same time the factory's demand for power has 
incrased 80 per cent while the total cost of power department de- 
creased from $24,000 to $17,000 per month-average. ,, 

A more complete story of actual results accomplished within two 
years of mastering power production according to the fundamentals 
advocated by us is told graphically in Figure 78. After almost a 
year spent in studies, organization of auxiliary departments, regula- 
tion of service and gaining confidence and cooperation of the em- 
ployees a fairly rapid progress in bettering operating practice was 
made. The limit was reached however at about 67 per cent effi- 
ciency and only the payment of a secondary rate for applied skill 
finally secured the high efficiency of 74 per cent (includes econo- 
mizers, boilers and stokers) and resulted in a uniformly satisfactory 
efficiency. The effect of using two-thirds of anthracite screening of 
low heating value instead of straight soft coal is seen in the decrease 
of evaporative ratio per pound but this had no effect. on the thermal 
efficiency. Inasmuch as the use of anthracite coal was dictated not 
by considerations of economy but was at that time a measure of 
expediency, it being advisable to keep the factory in operation irre- 
spective of disadvantageous coal prices. 

In many instances haphazard operation of plants fails to secure 
full output of equipment, especially of boilers. The results of this 
ignorance as to what is the reasonable and economical load for 
boilers to carry are manifold; lack of spare boilers ranks first as it 
limits the time available for proper cleaning and maintenance, thus 
materially lowering operating efficiency; next in importance is that 
due to an excessive number of boilers on the line which causes a 
considerable lowering of operating efficiency and excessive use of 
fuel in boilers nearly banked. In extreme cases it appears that with 
an increased steam and power demand it is necessary to install addi- 
tional boiler capacity — thus adding to the above losses a new one — 
of overhead charge on useless equipment. 

A reference to a case of this character may not be without value. 
Several years ago, the author was consulted in regard to the contem- 
plated additional installation of boilers in a plant furnishing a bleach- 
ery with steam and power. The plant contained ten Manning boilers 
equipped with Jones underfed stokers. A survey of the method of 
operating the boilers resulted in the condemnation of the plan of 



267 

adding new equipment. As a result of modified methods of manage- 
ment a materially increased demand of the bleachery is efficiently 
met by seven of the ten old boilers. The efficiency at the start had 
been found not to exceed 50 per cent and the men doing hard work 
on excessive number of boilers were not guided. Installation of in- 
struments on the boiler control board enabled the author to start the 




JUHE JULY AU6. SEPT. OCT. NOV. DEC. JAM.FEB.I^RAPR.MAY JUNE JULY AU6. mOCIUpV. DEC. 
ISIS Q19 

Fig. 78. — Two- Year Record of Power Plant Progress 

During eight months of preliminary period of studies and reorganization of 
auxiliary service boiler efficiency was 52%. It took five months more to teach 
men to secure 74% by following up our instructions. Consequently operating 
cost was reduced from 80c per M lbs. of steam converted to 34c, and the pro- 
duction cost per unit was cut in two in spite of increased cost of fuel and supplies 
and advanced wages and secondary rate paid. 

necessary studies and the result of training the men in the intelligent 
use of the instruments raised the boiler efficiency from 50 to 60 per 
cent. Further progress was made with the able assistance of the 
plant superviser who carefully trained the men so that the weekly 
average of boiler efficiency was finally built up to about 73 per cent. 
Further progress was made along the lines of reducing steam con- 
sumption through more efficient means of distribution and utiliza- 
tion of power and live steam in processes as shown by Table I. 



2 68 

Figure 79 visualizes the case. For three months the operating 
efficiency fluctuated within a large range, high points being reached 
during the weeks of our demonstration tests. Beginning April the 
cooperation of the men was secured and the management exhibited 
increased interest in the work, being stimulated by the advance in 
the price of coal. The improvement in methods, however, progressed 
more rapidly than the war-price on coal; toward the end of 1916 
difficulties of obtaining specified coal and the necessity of buying 
anthracite coal in the open market made necessary a change in fuel 
and while this has slightly depressed the thermal efficiency, the cost of 
coal per 1000 pounds steam at that time was 19.5 cents with the price 
of coal per ton nearly $6.30 as compared with old practice when 
with $5.05 per ton of better coal the cost of coal per 1000 pounds 
steam averaged 26.5 cents. With two adverse factors: lower heat 
value of coal and higher price per ton each thousand pounds of 
steam were made with 7 cents less coal used, equal to elimination 
of 35.9 per cent loss. 

Figure 80 tells the story of offsetting the effect of increased 
cost of coal by means of training the management and men along 
the lines advocated by us. The heavy curve represents the actual 
reduction of cost of coal per 1000 pounds of steam while the two light 
curves illustrate the effect of the improvement in method if the price 
of coal remained either as it was at the beginning of our work or as 
we left it. It appears that when buying coal at $8.35 per ton the steam 
power cost less than it was when coal was purchased at $4.62 a ton. 
While the above cited cases of plants of various sizes had me- 
chanical stokers, another example of what our methods accomplish 
in a hand-fired, unusually well managed plant was recently reported 
by Mr. G. E. Williamson at the eleventh meeting of the technical 
association of the Paper and Pulp Industry. 1 " The boiler plants 
referred to, due to the strict attention to operating practice, were 
operated before the work was started at efficiency averaging 67 per 
cent. Yet, he said, "their old methods, although a considerable ad- 
vance over those existing in the majority of paper and pulp mill 
power plants, did not prove entirely sufficient, as we realized that 
the maximum possible efficiency was not being obtained. The results 
easily shown in tests did not remain as every-day performance, and 
the interest and enthusiasm aroused in the firemen at these times 
soon disappeared and with them the high evaporation and efficiency. 
How to bring about such conditions permanently became the prob- 
lem. 

"It was then necessary to run a large number of boiler tests with 



269 

different conditions of draft, forced-draft pressure, thickness of 
fires, rate of combustion, flue gas temperature, coal mixture, etc., 
before we were at all certain. It was necessary to run some thirty- 
odd boiler tests before we were at all certain that all variable condi- 
tions are accounted for and that we really know how to adjust the 
condition in order to secure the maximum efficiency at any rate of 
driving. Following these study tests, we ran a number of check 
tests to ascertain beyond doubt the possibility of attaining the pre- 
determined results at will. 

"When this part of the work was done, we were in a position 
to set the task for our firemen, which can be described as exact living 
up to instruction card. 

"Once all prescribed condition's are fulfilled, the efficiency of 74 
per cent or better necessarily follows. 

". . . as the work progressed, it became a very important task 
of our supervisor to train the men to improve first one condition 
after another, until the everyday results obtained were comparable 
with those obtained under favorable test conditions. 

"The next step was the determination of a suitable bonus for 
accomplishing the standard task. Men realize full well that if they 
save coal their service becomes more valuable to the company, hence 
they expect corresponding additional compensation or bonus." 

What is probably of still greater importance was the company's 
clear realization that "the responsibility for inefficiency, waste of 
coal, loss of power, misuse of supplies, breakdowns, and interrup- 
tions to service falls on the management for it is plainly due to their 
neglect in any of the following respects: 

1 Failure to devise efficient method 

2 Failure to teach men good habits 

3 Neglect to provide men with necessary instruments and 

incentive 

4 Indifference to planning the work ahead 

5 Faulty organization of auxiliary service 

6 Improper selection, care, and issue of materials 

7 Thoughtless distribution of load through the day, week and 

year. 

The moral effect which these methods have produced are of in- 
terest. Here is a statement appearing in the employees' publication 
of this paper company which bears the witness : ua 



270 

"In comparing this year's records with those of last year, we find 
that a saving of 12 per cent has been made in fuel. This does not 
mean that 12 per cent less steam was generated but it does mean 
that for the same amount of steam generated one-eighth of the coal 
was saved. 

"What does this mean to you and to me from a patriotic point 
of view? Simply that this large pile of coal has been conserved for 
some other manufacturer to carry on his work." 

It is not infrequently heard that while the opportunity for con- 
siderable improvement exists in the plants of manufacturing con- 
cerns, the same is not true in cases of public utility plants. The 
usual argument advanced is that the electric light and power com- 
panies can afford to employ better talent and use more advanced 
methods than the manufacturing concerns who regard their power 
departments merely as a "necessary evil" and pay little or no atten- 
tion to how they are managed so long as they keep the factory run- 
ning. The stereotyped statement from this class of officials is "We 
give a good deal of attention to the operation of our various power 
plants and we from time to time modernize them and bring them 
up to date." U8 

Figure 81 gives a conclusive answer to this conceited statement. 
The dotted line represents the net cost per kilowatt hour in the plant 
regarding which the above cited statement was made; the solid-line 
curve represents the reduction of operating expenses in another rail- 
road central station managed under our supervision though without 
the opportunity of paying bonus. The data were compiled in both 
cases by a third and disinterested party (the Pennsylvania Railroad). 
Speaking from the broad experience in both central station work 
and manufacturing power plants, the opportunities for conserving 
natural resources and energy are larger in the public utility plants 
if not necessarily in percentages then always in totals. Even in 
cases where public utility's central stations are merely approached 
with the intention to only reduce the most obvious wastes, favorable 
results are readily attained without much effort. It is enough to 
mention well-known cases like that of the Philadelphia Electric Com- 
pany; Denver Tramway Company; Manilla Electric Company, and 
the like, where betterment was carried along "home-made" lines. 

In order to complete this review an extract from the paper read 
by Mr. J. C. Scholl before the Pennsylvania Electric Association at 
its eighth annual convention held at Bedford Springs, Pa., September 
8-10, 1915, is of much interest. The abstract of this paper printed 
on January 18th, 1916, says: "the methods that produced the re- 



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Fig. 79.— Increased Efficiency and Reduced Coal Consumption 
The average efficiency of the preceding year was under 50%. In the course of seven months 70% boiler 
and stoker efficiency was exceeded. In November it was necessary to use anthracite coal mixed with one- 
third bituminous. The new practice was successfully devised. Meanwhile price of coal gradually rose from 
$5.05 to $6.30 per ton yet unit cost of steam was reduced by about 7.5c per M lbs. of steam or over $4,000 a year. 






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271 

suits described in this paper were instituted by Walter N. Polakov, 
applied by him to the Warrior Ridge plant and fully described in a 
paper entitled Task Setting for Firemen, presented before the De- 
cember, 1913, meeting of The American Society of Mechanical 
Engineers, also published in Power, December 23, 1913. — Editor." 




Fig. 8o. — Increased Efficiency and Reduced Unit Cost 

The record of improvement of operating and managerial practice'in this plant 
is illustrative. If the coal were purchased all the time at $8.35 the reduction in 
cost of steam was 44%; if the price of coal were constant at $4.62^, the bottom 
curve shows the reduction. With the price of coal gradually increasing the actual 
cost of steam per M lbs. was reduced very materially, same as in the case in 
Fig. 79- 

In this case the average boiler efficiency as established by an 
eighty-day observation of hand-fired Edgemoor boilers was 54 per 
cent. Without any expense for improvement or additions to the 
generating equipment and with only a few additional instruments, 
the author's methods, comprising the task work with bonus, im- 
proved the average daily performance about 33 per cent. 



272 

The plant superintendent of this company, Mr. J. C. Scholl, 
above mentioned, makes the following statement : "The experiments 
were made at the Warrior Ridge power plant, where the firing is 
done by hand. Many tests were conducted to determine, not the 
greatest amount of coal or ashes that could be handled by a man in 
an hour or a day, but the amount that he could handle regularly, 
without fatigue. In addition the proper weight and shape of tools, 
the correct amount of material to be lifted each time, the least tiring 

0.70 




456789 10 1 12 12 3 4 5 6 
1914 Months 1915 

Fig. 8i. — Comparison of Operating Cost Tendencies in Two Railroad 

Electric Plants 

A railroad central station under an old-fashioned mode of management was 
able to operate more economically than another plant of neighboring railroad. 
The latter, desirous to reduce expenses, adopted in a measure our methods and in 
six months was operated decidedly more economically. 

motions, the time required for each operation and the frequency 
of operations was determined. 

"As soon as the best methods and equipment were determined, 
written instructions were prepared covering the practice that had 
been found to produce the best results, and the proper tools were 
provided. Instruments were installed that enabled each man to see 
that proper conditions were maintained. 

"Then came the most difficult part of the task — the careful and 
patient drilling of each man in the correct performance of his task 
so that the same results would be secured the same way each time. 



273 



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CU ft 

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I 



274 

The success of such training depends to so great an extent upon the 
willingness and the sustained interest of the worker that some plan 
had to be adopted for insuring this interest and cooperation. It was 
therefore decided to give each man a bonus for every day that he 
carried out the written instructions and attained or exceeded the 
results that should follow the fulfillment of the prescribed methods. 
The success of the plan is most gratifying, for not only has the com- 
pany saved expense, but the workers have reaped benefits in higher 
wages and better physical condition after the day's work. 

"The results obtained during ten average days at the Warrior 
Ridge plant under the system that has been described are shown in 
the following table: 

RESULTS OF OPERATION FOR 10 AVERAGE DAYS 

Three Boilers 

Heating Surface sq. ft 6000 

Horsepower, manufacturer's rating 600 

Horsepower developed 1150 

Horsepower developed above rating per cent.... 91.8 
Maximum horsepower developed 15 minute 

peak, per cent 1500 

Temperature of escaping gases, deg. fahr 490 

Temperature of superheated steam, deg. fahr. 505 

COa (approx.), per cent 10.5 

Apparent evaporation, lb 8.907 

Equivalent evaporation, lb 10.714 

Factor of evaporation 1.203 

Efficiency of boilers and grate, per cent 72.5 

Steam per kw-hr., lb 22.27 

Coal per kw-hr., lb 2.5 

All-over efficiency, per cent 9.5 

Cost per 1000 lbs. of steam, dollars 0.0823 

Cost per kw-hr., of coal, dollars 0.00221 

Average daily load factor, per cent 67.3 

Pounds of coal banking per 1000 sq. ft. heating 

surface per hour 26.3 

Coal used, kind Broad Top 

Fixed carbon, per cent 77.12 

Volatile, per cent 15.95 

Ash, per cent 6.93 

Moisture, per cent 1.20 

Heat Value, B. t. u «, 14,350. 



275 

"The success of the system in use in our power plant is de- 
pendent upon a spirit of cooperation between the management and 
the workmen. The management is compelled to accept its proper 
share of the responsibility and must keep in touch with the latest 
developments of boiler-room practice. If any suggestions are 
adopted, an effort is made to give full credit to the originator of 
the idea. The workman's responsibility commences as soon as the 
standard has been established and is placed in proper form before 
him by the management." 









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Fig. 83. — Bonus Record (continued) 
In the same plant substantially the same crew continued to steadily earn a 
secondary rate and maintain a uniform high efficiency years afterwards. 

In conclusion the author gives the following significant sum- 
mary referring to the spirit created and maintained by practicing 
our principles of mastering power production: 

"Not only have the results of the introduction of the new boiler 
room practice been most gratifying from the standpoint of reduction 
of expenses to the company and improvement in the conditions affect- 
ing the workman and his compensation, but it has also increased the 
mutual respect between management and workman and has devel- 
oped the esprit de corps which is so beneficial to both. The work- 
man is as much interested in the success of the methods and the 
standards which have been established as is the management. It 
is not the case of T on the part of the workman, but 'We' are 
working together to obtain the highest efficiency in our boiler room." 

This splendid spirit of democratic cooperation is the key-note of 



276 

the success of any industrial undertaking. Its attainment is based 
on that true leadership of men who know and who place their 
helpful knowledge at the service of men. It cannot be decreed 
from the central office; it cannot be instilled by absentee directors 
or maintained by an official who holds his job by bluff and who 
claims authority without assuming full responsibility for guiding, 
instructing, and helping the operating crew. Such service can be 
rendered only when based on the knowledge of facts and through 
men in industry it benefits the community it serves. The fostering 
of this "spirit of democratic cooperation" is finally the greatest result 
that comes from the work of the consulting management engineer 
in industry. Mr. L. P. Alford, concluding his article on "Results 
of Mastering Power Production" in May, 1920, issue of the Indus- 
trial Management said: 

"To show the way in which this spirit works from below up- 
ward in improving power plant conditions the author of this article 
a few months ago walked with Mr. Polakov into the boiler room 
of one of his clients, The Celluloid Company. A firemen greeted 
us pleasantly and at once proceeded to tell Mr. Polakov that certain 
things were not right in connection with the plant and that he ought 
to have them fixed at once. 

"The interest in improving conditions and mastering production 
revealed by this incident places in sharp contrast the differences be- 
tween the mere improvement of machinery and equipment in a 
power plant and developing the 'spirit of democratic cooperation.' 

"The logical way in which Mr. Polakov secures the results dis- 
closed . . . is to search for a final, clear and definite answer 
to each of three fundamental questions : 

1 Is the equipment of the plant doing its work? 

2 Is the material utilized without waste? 

3 Are the men properly trained and do they exercise their 

skill? 

"The answers are made personal, being secured for every shift 
and are at once made known to everybody concerned. This arouses 
interest and if a suitable reward is offered for increased effort the 
employees take it upon themselves to secure the best possible re- 
sults. This method arouses no opposition, for the improvements 
virtually originate with the men themselves and the work of the 
consultant is to advise the management how to help the men to do 
their best." 



Chapter IX 

MASTERING RECORDS 

THE obvious object of power production is to replace physical 
exertion of human labor by application of some form of in- 
carnate energy. The industrial evolution of the last century was 
characterized by an enormous increase of productivity of human 
society made possible by the use of mechanical and electrical energy 
as a motive power in production, transportation and communication. 
To record the progress in these activities is to record the advance- 
ment in generation and application of power. 

If the labor of 100 miners, 30 railroad men, 15 mechanics, 5 
power house men and 50 of various other occupations serving these 
people will produce enough power to save the physical labor of 200 
mill workers, there would be no advantage to society to keep 
up mining, power generation, etc., for the same number of men in 
the same time could produce the same amount of goods working in 
the old-fashioned way without help of power machinery. The fact 
is, however, that about three millions of men engaged in various 
work contributing to power production help to produce more goods 
than thirty-six millions of men working twelve to fourteen hours a 
day could produce without the aid of power. In the words of Ex- 
Secretary of the Interior Franklin K. Lane "to know what we have 
and what we can do with it — and what we should not do with it 
also — is a policy of wisdom, a policy of lasting progress. And in 
furtherance of such a policy the first step is to know the resources 
— our national wealth in things and in their possibilities ; the second 
step is to know their availability for the immediate use; the third 
step is to guard them against waste either through ignorance or 
wantonness ; and the fourth step is to prolong their life. . . /' 

These four steps toward the wise mastering of power production 
were analyzed in the preceding chapters ; now our problem is to out- 
line a method whereby we may learn the facts — i. e., to measure 
the efficiency of mastering the problem which is second to none in 
the importance for the welfare and the future of society. 

Purpose of Records 

Any one but a feeble minded or criminally reckless person natur- 
ally wants to know the results of his acts. Even murderers are 

277 



278 

known to eagerly read the accounts of their deeds and are very apt 
to visit the scene of the crime. The general absence of power plant 
records is however neither a surprise nor an exception for their 
absence is demanded by the impulse of shame. 

It may be interesting to know that one year's coal consumption 
is equal in bulk to a Chinese Wall if erected to completely surround 
the United States and has, according to Steinmetz, enough poten- 
tial energy to lift itself 200 miles high. It is shocking to admit 
that we irretrievably waste every year half of this enormous amount 
of fuel. In power production we utilize only about 7 per cent of the 
coal energy while with the existing, however imperfect, machinery we 
could make use of at least 10 per cent thus wasting 30 per cent 
through mere ignorance and indifference. There is nothing to 
boast about such records and so, in the past, little was known and 
still less said concerning our national pastime — daily coal destruction 
under boilers, in beehive ovens, in locomotives, at homes, on board 
ship, etc. 

Under the pressure of war requirements however the startling 
revelations could not be any longer kept secret. Yet the publicity 
which this "Kultur" of our natural resources received was decidedly 
an unproved accusation as no accurate method of getting data of 
waste was available. Moreover, the method of analyzing the data 
obtained was not in general use. Records, however accurate and 
complete, are of no value unless they serve a definite purpose. To 
keep records merely for the sake of having them on file is worse 
than useless inasmuch as such practice requires labor, time and 
expenses, which might have been used more productively. The true 
purpose of plant records is to direct the work of administration 
toward rendering maximum service with minimum waste. To this 
end the records must show : 

1 What is being done 

2 How it is being done 

Merely to know what was done is much less important than to know 
at all times what is being done and in the extreme cases records of 
the past do more harm than good. The more time elapses between 
the occurrence and the attention paid to the record, the greater is 
the amount of loss sustained in the meanwhile ; the less therefore is 
the value of such belated record. Hence the first characteristic of 
records is that they must be immediate. 

Another important consideration is continuity of record. Taking 
periodic readings on conditions subject to frequent or wide fluctua- 
tions cannot serve for the purpose of establishing fact, as periodic 



279 

readings may be taken during unrepresentative intervals, the con- 
clusions thus becoming grossly misleading. Therefore the second 
characteristic of records is that they must be continuous. 

Again, records of certain conditions or functions, however accu- 
rate and continuous, may be totally obscure or even misleading as 
to the results if these records in themselves are influenced by other 
conditions for which no proper accounting has been made. There- 
fore the records to be of full value must be complete. The para- 
mount characteristic of a good record is of course its unquestionable 
accuracy, for only a correct record represents fact and gives informa- 
tion of value. Yet, records answering these fundamental require- 
ments of being: (1) correct, ^(2) complete, (3) continuous, and 
(4) immediately available, occasionally prove of little value if they 
are not clear. Records that are difficult to read, interpret, and use 
because of their needless complexity, poor arrangement, obscure 
presentation and indefinite interrelation lose a major part of their 
value because neither a busy operator nor rushed executive can take 
the time and trouble to puzzle out the riddles of muddled records, 
and so they will keep on working as if they had no records at all 
or else use only a few of them that are easy to grasp. It may not 
be amiss, before we pass to classification of records, to illustrate by 
a few simple examples how the neglect of the above stated require- 
ments of proper records renders them useless. 

Incorrect records may easily mislead the men and the administra- 
tion. A draft gage that got out of adjustment caused the fireman 
to maintain excessive draft with the result of large loss of fuel while 
bonus had to be paid him for correctly following instructions. In 
another case the management, basing their conclusions on the record 
of an automatic coal scale thought the boiler efficiency was near 70 
per cent and for 9 months, until the coal storage was exhausted, 
neglected to do anything; yet the actual efficiency was 62 per cent 
because of an extra weight on the scale beam placed there by mis- 
take and sealed by inspector. In the chapter on maintenance, due 
stress was laid on the importance of care of instruments and a 
method of periodic inspection and checking was briefly outlined. 

Incomplete records similarly are often the cause of material losses. 
A boiler house of a large manufacturing concern where premiums 
were paid for high CO2 content in flue gases had no means for 
keeping records of evaporation and boiler efficiency. After three 
years more complete records were instituted because of an alleged 
shortage of boiler capacity. It then became evident that with de- 
tached record of flue gas analysis 13 per cent CO2 average corre- 



28o 

sponded to 75 per cent of the load on the boilers running at about 
60 per cent efficiency, while with 110 per cent average load carried 
with spare boilers and only 11 per cent CO2 the efficiency was in- 
creased to 69 per cent average. In this manner 13,500 tons of coal 
were wasted annually due to incomplete records. 

Intermittent recording likewise possesses elements of real danger 
to economy of operation. Half-hourly readings of electric load in 
amperes, recorded on the station log indicated apparently a large 
output for reasonable amount of fuel consumed and the plant opera- 
tion was continued in happy ignorance for years until a graphic 
watthour meter was borrowed. It showed that nine pounds of 
coal were used per kilowatt hour and the plant was promptly dis- 
continued and electric energy purchased from a near-by hydroelectric 
plant at a price that would mean a loss if compared with the old 
ampere record but which in reality meant a comfortable saving of 
fuel and money. A record of a large public utility boiler-house in 
Philadelphia apparently indicated that an average ashpit pressure 
maintained there was about two and a half inches of water. When 
an attempt was made to see this pressure continually kept, it was 
found that the fan would be shut down for three minutes 
approximately every seven minutes. Yet their combustion engineer 
regarded it as bad form to take down the record while the "jack 
was down," recording only the reading at nearly full speed of the 
fan. It is easy to imagine how much coal was wasted in this case 
both due to banked fires and escaped volatile combustible matters 
during these three minutes, as well as due to excess of air during the 
seven preceding ones. The loss was sustained "coming and going/' 
but the record showed a uniformity. 

Delayed records, not immediately available for guidance and con- 
trol are similarly limited in value. In a middle western plant an 
elaborate array of recording instruments was installed in the chief 
engineer's office. Once a day the readings would be taken out, cal- 
culated and filed away. The operating men were totally blind as 
to what they were doing. The results were not satisfactory and 
the "boss" was displeased. But the men, feeling that they were 
unjustly criticized did not care to stand the abuse and shut the plant 
by a walkout. 

In another case the fairly complete and accurate records were 
not analyzed until Saturday afternoon and the men notified as to 
their results on Monday. Obviously an error made in adjusting 
the conditions of the fire or distribution of load among the turbines 
could not be remembered and if changes were made, lumping daily 



28l 

performances for a week together would not disclose what the 
change was for the better and what for the worse. The total 
thermodynamic efficiency of this plant varied between 6.5 to 7.1 
per cent while the boilers could make 70 per cent and turbines 14 
per cent efficiency on 24 hours variable load thus the loss in this 
plant was nearly (9.80 — 6.75)6.75=30.3 per cent. 

Records that are not clear or comprehensive require more than 
ordinary effort for interpretation and generally fail to render use- 
ful service. Complicated charts upon which several recording pens 
are drawing a web of multicolored lines on different scales, etc., are 
seldom used by men as a guide for their work. Even in the office 
these charts are generally looked upon with amazement if not be- 
wilderment and only a few trained persons can read their hierogliphic 
signs. Similarly purely engineering records, thermodynamic dia- 
grams on logarithmic paper, etc., excite more admiration (or jokes) 
in the main office than they serve as incentives for help, cooperation 
and recognition of work done and handicaps encountered. 

The purpose of records being representation of what is being 
done, the keeping of records merely means to present the facts for 
the use of operators and executives. When the facts pertaining to 
the actual performance are known, it is possible to compare it with 
the ideal or practical task and to thus judge the degree of perfec- 
tion. Indeed records which do not compare what is with what 
should be are merely dead letters, and hardly worth the paper on 
which they are written. The ultimate function of records is there- 
fore to show immediately, clearly, correctly, completely, and con- 
tinually : 

1 Whether the loss occurs 

2 Where it occurs 

3 How it occurs 

4 How big it is 

5 How it is to be prevented 

6 Who is to prevent it. 

Classification of Records 

The securing of accurate and instantly available records is there- 
fore a basic condition for success in mastering production as well 
as distribution. Without a complete set of records, efficient genera- 
tion of power is unthinkable but the possibilities offered by the 
keeping of records may be realized only on conditions that proper use 
is made of the story told. 



282 



The mechanism for securing records must be organically fitted 
to the process under observation. Mere result of a performance 
leaves room for speculations and guesses as to its causes; thus ratio 
of pounds of coal per kilowatt hour constitutes neither a record of 
performance nor of the efficiency of equipment. In the first place 
three pounds of coal per kilowatt hour may represent 30,000 B. t. u. 
or 42,000 B. t. u. input. If we express the ratio in heat units per 
kilowatt hour, say 35,000 B. t. u. per kilowatt hour, we must know 
how many heat units are needed in a given plant under perfect 
condition of equipment and under proper method of operation 
before we know what the record means. If 28,000 B. t. u. per kilo- 
watt hour is the practical aim to be attained, the record discloses 
25 per cent loss, part of which may be due to poor maintenance and 
repair of equipment while another part may be caused by wrong 
operating practice. Again, kilowatt hours are born neither as Pal- 
lada from Zeus's head nor like Diana from a shell, ready made in 
all its divine beauty and glory; it is rather to be compared with a 
butterfly whose appearance in its final form is preceded by a long 
and tedious metamorphosis from an egg to a caterpillar, a chrysalid 
in a cocoon and only then she leaves Nature's womb to perform 
her brilliant feat. Likewise our kilowatt-hour passed several stages 
of transformation before it takes the form of electrical energy. 
The record, before it may be regarded as a useful information for 
elimination of this waste, must be able to allocate: 

1 The stage in which the loss occurs 

2 The cause of inefficiency. 

Let us assume a steam-electric power plant, the inherent effi- 
ciency of principal units of equipment being for example as follows : 



Stage 


Efficiency, 
Per Cent 


Process 


Boiler plant, including all auxiliary 

Turbine room, including all piping 
and auxiliaries 


75 

15 

80 
9. 


Transformation of thermo-chemi- 
cal energy of fuel into volume 
energy of steam 

Transformation of volume energy 


Generating room, including excita- 
Entire plant 


of steam into dynamic energy of 
shaft 

Transformation of mechanical 
energy into electrical energy 

Entire process 









Figs. 84 and 85. — Recording Attachment to a Beam Scale 

A simple manner in which the coal brought to the boiler room can be cor- 
rectly weighed and recorded consists in double electric contact which is closed 
when the beam is in balance. When the load is thus balanced two lights are lit 
and record may be punched on a tape besides the pen mark as shown in Fig. 86. 
Such home made recorder is cheap to make and answers the purpose. 



2$ 3 

The cumulative effect of losses is plainly apparent; they stand 
in dependent sequence to each preceding process since the loss sus- 
tained in a previous stage reduces the energy available for the fol- 
lowing process. Only nine per cent of the heat energy available in 
the coal is finally transformed into electrical energy available on the 
outgoing feeders if this plant is operated perfectly; that is, if the 
equipment continually develops under operating conditions the maxi- 
mum energy for which it is designed. This nine per cent represents 
38,000 B. t. u. input to one kilowatt hour of plant output, which is 
theoretically equivalent to 3412 B. t. u. Neglecting the enormous 
waste of natural resources, caused by our crude and imperfect way 
of designing and building power-generating equipment, let us con- 
sider the effect of improperly Using what we have. Suppose that 
our record actually shows that 48,750 B. t. u. in the shape of coal 
are used to generate one kilowatt hour. Comparing the actual per- 
formance with the possible task figure we find that our operating 
methods caused about 30 per cent loss. Now comes the question, 
where does this loss occur? If our record is complete, it would 
show a picture like this : 





Possible 


Actual 


Loss. 


Boiler plant efficiency, per cent 


75 

15 

80 

9 


56.50 

14.00 

79.00 

6.25 


24 66 


Turbine room efficiency, per cent 


6.66 


Generating, transformation, etc., efficiency 

All around plant efficiency, per cent 


1.26 
30.50 







To analyze further the significance of these records, we must pos- 
sess accurate information as to what causes the loss in each stage 
of the process. 

The loss in steam generation may be produced by excessive or 
insufficient draft, poor attendance to the fuel bed, neglect to keep 
the heating surface clean, etc. The loss in the turbine room may 
be due either to a failure to apportion the load among different 
units so as to take advantage of the lowest region of the water-rate 
curve, or to neglected vacuum or to a poor condition of blading or 
even to poor attendance to the auxiliary mechanisms. Similarly, 
excessive electrical losses may be caused by factors that are just as 
much within the control of the management as the mentioned exam- 
ples in boiler and turbine rooms. 



284 

Methods of Collecting Necessary Information 

Observations recorded in handwriting. A large portion of data 
is obtained in this manner — store-room records, repair records, cost 
records and part of the data appearing on the operating log. Some 
of these data could not be otherwise obtained while others can be 
secured automatically with advantage. Weighing coal issued to 
firemen is seldom accurate if done manually and scales that require 
stamping a record are only slightly better than a coal passer's tally 
for he can just as readily forget to punch the scales as to move a 
peg on his tally-board or to mark a cross on his report slip. Plat- 
form scales are sometimes arranged to weigh only a fixed load, say 
500 pounds, in a wheelbarrow balanced by adding or taking off 
coal. The record cannot be stamped unless the load is in balance, 
neither can the wheelbarrow be removed until correct weight is re- 
corded. A sample of such a tape record and a photograph of the 
scale devised by the author, and used for the purpose, is shown in 
Figure 84 and Figure 85. In this case a mixture of bituminous and 
anthracite coal being used, the gates to coal bins and spouts are 
so arranged that the coal coming from one bin is recorded on one 
side of the tape while that coming from the other bin is shown on 
the opposite side. The correct load moved to the boiler room is 
marked by a burr on the corresponding side of the record line, and 
a hole automatically punched opposite denotes that the coal passer 
entered this weighing on his record. (See Figure 86.) 

The efforts to substitute automatic records for manual ones are 
continually made and are generally speaking commendable with two 
important amplifications. First, instruments recording operating con- 
ditions, such as draft gages, ammeters, thermometers, etc., must be 
regularly read by operating men at frequent intervals and the read- 
ings recorded in writing on the log for they serve to guide and protect 
operation. The automatic record of the past, showing the cause of 
the burned armature or misused fuel may be interesting but it is not 
what is wanted, it is prevention of such occurrences that is sought 
and this can be assured only when the indications are constantly 
watched by operators. This practice has also a psychologic advan- 
tage as it provides interest in the work, stimulates attention, and 
schedules regulated trips for taking readings, during which other 
conditions may fall under operator's observation, etc. Secondly, 
nothing can be gained by automatic recording of individual man's 
performances. The use of census machines, etc., is warranted for 
sales records, account classifications, billing customers, etc., in cases 



28s 



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COAL SCALE RECORD 








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Fig. 86. — Record of Coal Weighed 

Electric coal scale attachment as shown on photographs Figs. 84 and 85 gives 
above record. It registers coal passed from two bins. Two lines are from two 
contacts; burrs are made on both when load is in balance; only then punch mark 
is possible. For details see tezt. 



286 

where personal contact is less important than completeness and 
promptness of summarized informations. The cases of men's effi- 
ciency of work, amount of earning, reasons for failures, etc., must be 
closely and individually studied and scrutinized as otherwise gross 
misunderstanding and sometimes injustice is sure to follow. 

Autographic records must have a widest application in power- 
plant work for they not only assure accuracy, but what is equally 
important represent a continuous picture of fluctuations the knowl- 
edge of which is essential and obtainable in no other way. Chart 
records of pressures, temperatures, voltage, watt-hour load, etc., are 
of great importance however only if the curves drawn by instruments 
are constantly before the eyes of operators; they lose most of the 
value if invisible or located in the office. The value of chart records 
for future studies of past occurrences is usually much exaggerated, 
for, in a well-conducted plant proper use of indications is made con- 
tinually, while in a slip-shod managed plant a discovery that some- 
body did something wrong yesterday or last week is apt to bring no 
other result than a reprimand or a row. The cause of poor perform- 
ance not being radically removed, its occurrence will repeat itself 
until either "the boss" will grow tired or men get irritated and 
utterly disheartened. 

Integrating instrument records have their own wide application 
in power-house work and in many cases permit no substitution, such 
as integrating watthour meters, revolution or stroke counters, feed- 
water of steam-flow meters, time clocks, etc. Their function is to 
show total quantities, hence they cannot take the place of indicating 
or chart-drawing instruments which serve as continuous guides for 
operation. It is not enough to know however how many pounds of 
steam was evaporated, but the fireman should know at any time the 
load he carries ; likewise it is not sufficient to know how many kilo- 
watt hours were generated, but the operator should know constantly 
how the load fluctuates. Another very important useful function of 
integrating records is that of representing the amount of work done 
in a given period of time, serving two purposes — first : determination 
of schedule for cleanings, overhaulings, etc.; deterioration of effi- 
ciency, other conditions being equal, usually is proportionate to the 
output, not time. Second, determination of peak periods, necessary 
reserve capacity, fluctuation of demand throughout the twenty-four 
hours and the days of the week as well as for recording such 
conditions as fluctuation of voltage, shut downs, etc., which may be 
used to prove or disprove claims for damages. 



287 

Methods of Presenting Data 

Descriptive presentation of facts is usually the least satisfactory 
because it permits personal interpretation, modifications, and errors. 
It also requires more time to listen to the narrative or to read a re- 
port than to see figures and charts. In some instances, however, this 
is the only form in which the facts could be intelligently presented, 
particularly if the report is made to a person unfamiliar with tech- 
nical details. For instance, whenever the conditions affecting the 
performance record were changed during or before the period re- 
ported a reference to such a change with explanations where and how 
it influenced the performance, should be made descriptive. In such 
cases the language must be clear and concise, arrangement of ex- 
planations parallel to numerical or graphical report and conclusions 
or corrections made for each item as well for final result ; otherwise 
repetition and cross references cannot be avoided. Similarly, notes 
on the power-house log, remarks on requisitions, etc., constitute de- 
scriptive records and in all cases must be dated and timed. Date 
and time must be that of making the report or of the occurrence 
itself ; never the date of transmitting them to the office. Typists 
should be instructed in writing reports never to date them with the 
date when they happen to transcribe same as this constitutes perjury 
and often puts the reporting party under unjust responsibility for 
delay, incompleteness, etc. 

Numerical records, such as typified by tabulations, summaries, 
balance of stores, time tables, etc., should be avoided as far as possi- 
ble, and substituted by diagrams and charts except when the exact 
numerical values are essential for these records or for the purpose 
of final graphic presentation. Hours of work, number of articles 
issued or received in store room, units of output, etc., constitute 
typical numerical reports this form being necessary in the first stage 
of working out the record but for permanent and comparative pur- 
poses they must be reduced to charts and curves. 

Graphic records are the only convenient records inasmuch as 
they represent at a glance and usually with great accuracy and ease 
a number of facts that otherwise would remain obscure. The instru- 
ment charts, especially circular ones and those on variable scales, 
are not as clear as curves drawn on tape-charts with equally divided 
scales. More than one curve on instrument chart is seldom desirable ; 
while for the purpose of comparison of interrelated functions mul- 
tiple-pen charts have advantages in the office they are frequently 
confusing in the plant. It is always advisable to sacrifice the con- 
venience of the office for the sake of helping operators to perform 



288 

better work; the office force handling these charts is trained and 
it is much easier for the supervising engineer to compare separate 
records at his convenience on the desk than for operating men to 
differentiate points of importance during the press of actual work. 
After the original or basic records are collected and worked out, in 
order to draw deductions and obtain the benefit of careful analysis 
of performance, the record data must be presented in a final form. 
Diagrams on two axes of coordinates, one of them usually being the 
time-scale, are very convenient for persons trained and could be 
easily adopted for study of relations of several factors. These dia- 
grams may be either drawn or laid out on a display board by means 
of string or elastic stretched on pins as shown on Figure 87. Less 
often diagrams on three coordinates are used to represent more com- 
plex relations of factors recorded. Polar coordinates may be used 
to advantage in many cases but their usefulness is restricted to men 
with mathematical education being rather confusing for the operating 
force. 

The common handicap of all diagrammatic representations is the 
use of two or more scales simultaneously, and as the object of graphic 
record is to picture the progress, amount, or quality of work per- 
formed in the plant the method must be so simple and obvious that 
any one could grasp its meaning without effort. Furthermore as 
regard men's records diagrams are bulky and irksome to use. It is 
hard to represent on a diagram more than the work of a few men 
and thus for comparison it is necessary to handle several diagrams 
carrying in memory the mental picture of each. On the other hand, 
a curve on one diagram representing an average of a group of men 
fails to give the individual's record which is of great importance. 
The method of presenting graphic records by means of straight bars 
obviates all the above difficulties and furthermore presents several 
other advantages. 

Our central idea of records is that records must picture what is 
occurring in the plant, not what has happened. In this it differs 
radically from statistics which, as exemplified by the census, has a 
value for understanding the past and sometimes serve as a basis for 
prognostication of the future but never to master the present. Charts 
which continually show what progress is taking place in the plant, 
are sometimes compared with moving pictures, while tabulated data 
or diagrams of isolated phenomena are, like a photograph, detached 
from surroundings and devoid of means for comparative measure- 
ments. Furthermore, as it has been pointed out, our knowledge of 
facts receives its value only upon comparison of what was done with 



289 

what should have been done — call it as you may — a standard, an ideal, 
a task or a bogey. The charting method of presenting a living picture 
of progressive records is based on this standard accomplishment. 

The time, the quality, or the quantity, expected or allotted for any 
process or performance is always the unit in our graphic method and 
this may be referred to a period, to a department, to a machine. 




Fig. 87. — Display Record 
In the chief engineer's office a board ruled as above is used to indicate fluctua- 
tions of load, machine factor, thermal efficiency of the plant, etc. Drop on 20th 
of the month is due to the beginning of parallel operation of RR. central station 
with a public utility plant selling power to the RR. 

to an operator, or to several of these variables at once. Finally, this 
method, being simplified to a straight line in any and every case, 
not only permits quick and reliable comparison of as many as 292 
items on one small chart, as for instance our Coal Utilization Chart, 
but allows accurate measurement of perfection of operations and 
above all is so obvious that every man in the plant or even in a 
bank* can readily understand the meaning and significance after 
brief explanation of the principle. 

* The National City Bank, for instance, advocates these progress charts. 



290 

Function of Plant Records 

The plant records should reflect three fundamental functions: 

1 Whether the equipment is utilized 

2 How the materials are utilized 

3 What the men are doing. 

Whenever any of these functions are not working properly we must 
know why in order to find the remedy. The most comprehensive 
way of finding out what is wrong with a plant and what remedy 
is needed is that of surveying the three charts representing working 
of these three principal factors : 

Equipment in the plant is installed to be operated. The question 
to be answered is then: what portion of time it is being used and 
what does it do? 

Material used in the plant is principally fuel that is converted 
into some form of energy. The question is: What portion of it 
is actually converted and what is wasted? 

Men are in the plant to make proper use of equipment and ma- 
terials. The question thus is: how well do they do it individually 
and if some fail, why? 

If these performances of equipment, material, and men are 
charted in a simple manner by straight lines against the scale repre- 
senting possible and desirable result, any shortcomings become ap- 
parent at a glance and proper efforts may be directed at once where 
the help is needed most. 

Collecting Data 

Time as a measure of work done has obviously no advantages 
except its simplicity, yet in a great majority of cases this simplicity 
is attained at a sacrifice of accuracy and fairness. While it is un- 
deniably true that the time element is the most important factor in 
our life, that all thermodynamic processes and units of output con- 
tain time element or reduced to a unit of time like kilowatt hours, 
B. t. u. per hour, etc., and that time is perhaps the only thing that 
cannot be reclaimed and if wasted is lost irretrievably, one hour's 
work is an utterly meaningless term both as to the amount of work 
and the quality of it. Whenever we mention "hour of work" we 
must know definitely what is expected to be done during that time 
and what quality or efficiency of work or process is accepted as 
normal. A coal passer may deliver in one hour one ton of coal or 



291 

four tons; a fireman with one ton of coal can produce during one 
hour 10,000 or 20,000 pounds of steam. 

Once we have established, however, the rate at which certain 
work is to be performed as well as defined the requirements as to 
its quality or efficiency, then the measurement of time receives its 
meaning, not in itself, but merely as a time-rate of certain per- 
formance. 

So far as human labor is concerned, the time-measurement taken 
alone may serve only one purpose — as a basis on which the primary 
rate of wages (hourly or monthly pay) may be calculated. Yet 
one wonders how the productive time of a research man or of an 
executive could be measured or/ even ascertained, when the most 
valuable idea or plan was conceived while "resting in the movies" 
or even developed subconsciously while again weeks are spent at the 
desk or in the laboratory utterly fruitless of results. 

On the other hand the measurement of productive time of ma- 
chines is frequently neglected while it has indeed a well-defined 
meaning of great social and economic importance. One hour of 
idleness on the part of a 10,000 kilovolt-ampere generating unit 
represents, in fixed charges alone, a loss of nearly $25 and a many 
times larger loss of potential value of service not performed be- 
cause of its idleness, while one hour idleness of its special crew 
would not amount to even $4. 

The relative importance of keeping time of men's work is thus 
almost insignificant as compared with great value of time keeping 
of machines. For years the latter has been grossly underestimated 
and only meager data occasionally reported on the power log of 
which hardly ever any use was made. The question of expenses 
in connection with productive and idle time of machines and men 
is discussed in detail in the chapter on Analysis of Expenses and 
need not to be treated here. 

Keeping Men's Time 

The object of timekeeping from this broader viewpoint is: 

1 To know who worked 

2 To know when he worked 

3 To know what he did 

4 To know what he was paid for it. 

Recording working time in a manner enabling us to answer these 
questions can best be accomplished by means of an ordinary 



292 



decimal stamp clock, printing time on a suitable time card, per- 
mitting necessary entries for calculation of bonus or secondary wage 
rate. For the purpose of facilitating the cost keeping these cards 
should be changed with every change of a job, thus there may be 
more than one card a day per man or the same card may be stamped 
repeatedly for as many days as the job lasts. This type is partic- 



RET'D 
ISS'D 



NAME 



H. A. 
L. H. 



WAGES 
REG. 



BONUS 



HOURS 
TAKEN 



HOURS 
ALLOWED 



LABOR 
HOURS 



CHARGE 
SYMBOL 



NUMBER 



LABOR EXPENSE 



MACHINE EXPENSE 



WORK DONE:- 



ENTERED IN 



MAN 

RECORD 



SCHED- 
ULE 



PAY 

SHEET 



C06T 
SHEET 



I HAVE INSPECTED THE WORK REPRESENTED BY THE ABOVE 
ENTRIES AND BELIEVE THEM BOTH TO BE CORREOT. 



foreman 

<Vr><»A-<Vfv^o<vft A n (yo ©•O-O-O-O-el'O fi-0 O O^ 8-0*4*»»-****M^ Ut- »»«>! M A • » # • «^<> » '» — » «•«— * 

Fig. 88. — Old and New 
International recording clock card may be used for repeated operation for 
(square) should be devised to meet the requirement. 

ularly fitting for maintenance department, construction work, etc., 
where men are constantly shifted from one work or location to 
another. For keeping time of work that is substantially the same 
day in and day out, like switchboard operators, engineers, oilers, 
firemen, watchmen, etc., no inconvenience need be expected from the 
use of such even crude and inadequate records as those of old 
fashioned weekly "in" and "out" cards. (See Figure 88.) 



293 



In plants with a small crew all time-keeping records may be 
quite conveniently recorded directly on the log, while in the plants 
of manufacturing concerns the method existing in the shops may 



WEEKENDING 19 ... 

I. T« R. Co. Form No. 1212 

No. 

NAME 




MORNING 
IN 


NOON 

OUT 


*-r— 

NOON 
IN 


NIGHT 
OUT 


EXTRA 
IN 


EXTRA 
OUT 




M 
















T 
















W 
















T 
















F 
















S 
















5 
















TOTAL TIME. 




.....HRS. 


RAT 


E .. 






TOT 


AL WAGES FOR WEEK $ 


_ 







Styles of Time Cards 

which no task is set and no special record is wanted. Otherwise a special form 
(Get any old international time card) 

be adopted for the power house force, provided however, it offers 
the opportunity to: 

1 Identify the jobs (by symbol or similar method) 

2 Identify proper charge account 

3 Differentiate between time rate earning (primary rate wage) 

and the quality rate earning (secondary rate or bonus). 



294 

Inasmuch as all jobs done in the plant may be classified according 
to the character of payment, the time cards must have suitable pro- 
visions for proper determination of the amount of wages due for 
any job whether it is paid by: 

1 Hourly rate 

2 Quantity task with bonus 

3 Quality task with secondary rate. 

Hourly Rate. This earning is a product of total time taken by 
hourly rate. 

Quantity Task. In order to determine these earnings multiply 
the time allowed per piece, per ton or per any other unit of work by 
the number of units finished. If such time allowed (product of 
this multiplication) equals or exceeds the time actually taken, it indi- 
cates that the task has been made. The payment then is based not 
on the time taken but on time allowed plus a definite percent set 
for the job as bonus. If the time allowed is less than that taken, it 
indicates that the task was not made and the payment is based on 
straight hourly rate for the time actually taken. When quantity 
bonus is combined with quality, this is ascertained first, and the 
quantity bonus is paid if quality of work complies with requirement ; 
otherwise only straight hourly wage is paid. 

Quality Bonus. When quality of work constitutes the task, the 
quality or efficiency of operation is ascertained according to the 
established method. If the efficiency attained is equal or higher 
than that set as a task, the time actually taken is paid for at regular 
hourly rate as a primary rate of wages and on top of it an additional 
payment is made according to condition established for the secondary 
rate of payment. 

These records of men's time collected on time cards are sent 
to the pay roll clerk after the chief engineer, superintendent or plant 
clerk has verified the correctness of time reported and the fact as 
to whether the task assigned was lived up to or not. As appears in 
the sample log reproduced in Figure 89 it is sometimes desirable to 
keep men's time recorded on the daily log with special marks denot- 
ing earning or missing the secondary rate of wages, nature of work 
done, etc. 

Again it is always advisable to represent graphically on the man 
record chart or skill utilization chart, referred to in this chapter, 
the summary of use made of time by the members of crew. 



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, , - smeo. /y 1 , , 
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Fig. 89. — Specimen of a Power Plant Log 
Reproduction of an actual log showing the performance of crew and earning of secondary rate of wages. 



295 
Keeping Machines' Time 

The keeping of machines' time is relatively much more impor- 
tant than keeping men's time. According to the central station census 
of 1912 the division of expenses for men and machines was as 
follows : 

Per Year Per Hour 

All salaries and wages $61,161,941 $6,982 

Fixed charges on plants $88,547,983 $10,108 

Assuming that all men worked 8 hours a day 365 days per year, the 
average hourly earning was 26.5 cents per employee (including 
higher paid officials), while fixed charges per establishment per hour 
were $1.94. As averages of this kind are necessarily confusing, due 
to combination of widely varying extremities, both as to employee 
earnings and character and size of plants, two specific examples 
may elucidate the point in question. A 32,000 K.V.A. plant of an 
electric railroad bears hourly fixed charges of $29.76 while total 
hourly pay roll in 1914 was $14.22. In a typical factory power 
house (3,600 boiler horsepower) the fixed charges were $5.56 and 
the cumulative pay roll $5.11 per hour. 

The significance of these figures is augmented by the fact that 
while the idle men's time cost but their wages, the idle time of plant 
equipment cost not only mere fixed charges, but incomparably more 
in lost earning capacity. The above referred to central station 
having one-third of its capacity constantly idle, if it could sell the 
current at 1.25 cents per kilowatt hour would have turned the loss 
of $260,000 a year due to idleness into a net income of $41,600. 

The record of working and idle time of equipment should there- 
fore be kept in every plant in a manner showing : 

1 What units are working 

2 When are they working 

3 What are they producing 

4 What it cost to keep them idle. 

The questions are thus entirely comparable with those asked about 
men and the method of getting the answers suggests itself — time- 
keeping similar to that of men's work. 

In the power station it is extremely simple to collect the neces- 
sary data. Any well designed and properly kept daily log has provi- 
sions for marking both the time every unit was in service and its 
output. In this manner we obtain answers to the first three of our 



296 

questions, while the fourth one can be answered by comparison of 
actual output with the full safe output for the given time. The per- 
centage by which the actual output is short of that possible is the 
percentage of the fixed charges that represent the cost of having idle 
plant capacity above the necessary reserve for the safety. The pres- 
entation of these timekeeping data is explained in this chapter in 
connection with the equipment utilization charts. 

Store Keeping 

All materials and supplies used in the plant should be accounted 
for and record of materials should be collected and arranged so as to 
show: 

1 What material was used 

2 What quantity of it was used 

3 For what purpose it was used 

4 What did it cost. 

All materials could be classified into four groups : 

1 Operating materials such as converted or consumed in the 

process of power generation 

2 Operating supplies such as do not take part in power genera- 

tion or transformation but are necessary for running the 
plant 

3 Maintenance materials such as used to maintain plant and 

equipment in best operating condition but not new addi- 
tions 

4 Second-hand materials and by-product. 

In the chapter on Mastering Materials the routine of handling 
stores has been outlined. So far as operating and maintenance 
records are concerned we are here interested merely in collecting 
the data pertaining to store issues. Each and every article issued for 
use is covered by a store issue card (see Figure 90) which, when 
properly filled out gives all necessary information and thus serves as 
means of answering our four fundamental questions. 

In a factory or mill power plant, if existing storekeeping prac- 
tice is properly organized and correctly functioned, its stores issues 
could easily be made to serve the purpose by identifying each issue 
by the charge symbol. In very small isolated plants this matter 



297 

can be handled by operating engineers making adequate entries re- 
garding materials used on the daily log. 

Specific interests represent the collection of data on materials 
used for maintenance. While the results secured from the use of 
operating materials such as coal, are at once apparent from the 



STORES SYMBOL 

s 

. LOCATION 


CHARGE TO ORDER NO. 


QUANTITY 


UNIT 


TOTAL WEIGHT 

j 
LBS. 


UNIT VALUE 


TOTAL VALUE 

1 



DESCRIPTION 



STOREKEEPER 
PLEASE ISSUE ABOVE TO- 
AT M. ON. 



MONTH 


DAY 


YEAR 






192 



.192 



SIGNED BY MAN TO WHOM STORES ARE ISSUED. 



ENTERED IN 


STORES DESCRIBED ABOVE HAVE BEEN ISSUED 


BAL- 

, ANCE 




COST 














SIGNED BY STOREKEEPER 

AR HIS BPPRp-«?PNTATIVfr 







• *« 



STORES ISSUE 



>'j« 



Fig. 90. — Stores Issue Card 
No material is issued from a store room without such issue card. These cards, 
properly filled out, when sorted give not only a check on stock of stores, but also 
represent a charge against the job or operation. 

daily operating reports, the service rendered by maintenance ma- 
terials cannot be accurately determined for a long time. It is ob- 
vious, therefore, that a mere record of store issue of such material 
is inadequate for correct judgment as to suitability or value of given 
kind, brand or quality. For this purpose all data pertaining to main- 
tenance material are collected on special maintenance record cards 
(see Figures 44 and 45) referred to in the chapter on Mastering 



298 

Maintenance. In this manner we are able to know exactly what kind 
of material gives the most satisfactory service in the long run and 
what not, as well as to learn what method of upkeep or repair gives 
better results. 

Operating Data 

The collection of data recording operating conditions and methods 
is one of the most important routine functions of plant management. 
The principal questions that must be answered could be segregated 
into four groups : 

1 How much energy and resources were consumer (input) 

2 How much energy was delivered for use (output) 

3 Under what conditions was operation performed 

4 What were the results of these conditions 

Inasmuch as operation is a control of processes the data should 
be so collected as to show clearly and distinctly what results were 
due to control and what results were due to processes. In other 
words an utmost care must be exercised to separate the influence of 
human factor on the natural phenomena. These factors may be 
roughly illustrated as follows: 

Due to Men: Due to Machines: 

Unsuitable fuel Poor design 

Poor maintenance Bad lay out 

Unskilled work Wrong purpose 

For instance anthracite culm in furnace with weak draft will pro- 
duce unsatisfactory results even if furnace and boiler are capable 
of good economy with suitable fuel while again poor design of 
baffles may cause a loss though furnace operation be perfect. Ex- 
cessive soot and scale deposits will lower the efficiency of any boiler, 
while scattered boilers, unnecessarily long pipe lines, etc., similarly 
will increase expenses and waste. Lack of knowledge in distribut- 
ing load or adjusting draft will cause very material loss, but such 
will be also the result of using perfectly good equipment designed 
for different purpose. 

Obviously, the losses of the first class are under the control of 
management while the waste caused by the necessity of operating 
inherently inefficient plant should always be accounted separately. 
Common lack of appreciation of these dual causes of low efficiency 
in the majority of the plants is responsible in the popular tendency 





I 




J 


































- 








; 

i 
























































Besides usual entries and 
s (KWL, kgr, sec. C etc.) perf. 



Fig. 91. — Daily Log of a Central Station 
space for load diagram, this log, used by the author since 1914, c< 
f crew, bonus earned, maintenance and inspection entries, etc. 



L-d a few pioneer peculiarities for that time, such as metri 



: 



■ 















■- 



I 






299 

to excuse poor results by placing all blame on "old plant" instead 
of concentrating more efforts on improved operation of the existing 
equipment. Alterations and physical improvements introduced under 
such befogged impression seldom produce the expected measure of 
benefit, for the poor practice continues to fail to realize full advan- 
tage of new apparatus. 

To the contrary, in some cases, blame is blindly put on the men 
and attempts are made to increase the efficiency by "calling the chief 
on the carpet" and browbeating the men instead of judiciously anal- 
yzing the losses due to plant itself and carefully estimating the 
extent of expenditures for modernizing the plant equipment war- 
ranted by the elimination of losses by such means. 

On the other hand, the operating record data should be so col- 
lected and arranged as to permit differentiation of causes and results 
separately in each consecutive stage of the process of transformation 
of energy from fuel or penstock to busbar or driving shaft, etc. 
In a typical case of a carbo-electric plant at least three sequences 
of operating process must be segregated : ( 1 ) generation of steam ; 
(2) generation of electricity; (3) transformation and distribution. 
This grouping usually coincides conveniently with three main de- 
partments of the plant: boiler house, turbine hall, switchboard and 
high-tension room. Frequently each of these departments is under 
the direction of a responsible head and differentiated records thus 
help to keep individual account of each section, while the analysis 
of operating details thus recorded is of great help to the respective 
heads to improve their methods and to intelligently cooperate with 
each other. 

The daily performance log is no doubt the most important power 
plant record and its practical value depends as much upon its con- 
tents as on the manner in which it is filled. In course of our classi- 
fication of methods of collecting and presenting data references were 
made to different modes in which the data appearing on the log 
may be secured. Whatever the means of making observations it is 
of the utmost importance that those actually performing the work 
or directing it should personally fill out the log or at least verify the 
entries at frequent and regular intervals. In this manner a seemingly 
perfunctory work of keeping station log accomplishes great deal 
more than collection of data — it becomes a foundation for real leader- 
ship inasmuch as it combines in one man the inspector and the instruc- 
tor. A man constantly examining log-entries and comparing the 
progress and efficiency with records of conditions producing these 
results becomes an instructor and leader, for in every instance of 



300 



any deviation from good practice or in case of inconsistency of 
records he demonstrates to the operator, failing to maintain proper 
condition, how to do it and in this way helps him to secure better 
results. 

Several samples of power plant daily logs are reproduced in 
Figures 89, 91, 92 and 93. These cover a wide variety of cases : a 
large central station of an electric railroad; a medium size public 
utility plant ; two factory power plants, etc. The following instruc- 
tion for log-keeping briefly outlines its object and routine. 

Object. The log is kept in the power house for the purpose of 
recording at frequent intervals as the work is progressing: 

1 Conditions as affecting results 

2 Equipment used 

3 Time of occurrence 

4 Men working (time and quality of work) 

5 Materials used, received or issued 

6 Results accomplished (amount and quality). 

Form. Log Form P 1 is kept in the boiler house, Form P 2 in 
the engine hall. When completed both are pasted together ; the 
summary of results are made in duplicate copy being made on 
Form P 3. 

Keeping the Log. Boiler Room Log P 1 is kept by head 
fireman under supervision and responsibility of Boiler House Fore- 
man. It is dated as 6 A. M. when started and returned to power 
house office at the end of 24 hours for computation. It registers : 

1 Units in use 

2 Temperature of flue gases 

3 Boiler load (steam flow per hour) each boiler 

4 Draft, each boiler and furnace 



Hourly 



Continually 



At the end of each shift 



Coal weights delivered to stokers (hard and 

soft) 
Coal statement (coal cars received, unloaded, 

drilled out and sent to other plants) 

' 7 Men working 

8 Total coal (consumed, sifting, 
banking) 

9 Signature of head fireman of the 
shift. 




INTEGRATING WATT METERS 






,».. 


«™. 








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"iiffi" 


™'ftSS™ 


"SSS!" 




„,„., 








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^3<rt> 


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74/' 




LIGHTNING ARRESTERS 


A 


a 


c 






















(fs/h. 


SA*. 


•rzff*. 


4A/ 














■— 










































CO«L STATEMENT 


,<: 


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S^Sr •.;."'::::: ; .. 


,,■/■ o, 

AtYo 

fS-L/fyc 


^^ ',; ; . . . '. . . 



Fig. 92. — Actual Daily Lug Rf.p 
Log picked at random representing daily entries and a summary by shift of a plant of a public utility company operated under the 
iges recently inaugurated. Plant is a combination ofcarbo-electric and hydro-electric installations of 6000 k\v. capacity. 






. 














' 





























































































































































































I 



At the end of each shift 



301 

If readings are not taken or instrument was out of order, no 
entry shall be made but a question mark (?) written in place indi- 
cating uncertainty. c 

Engine Room Log P 2 is kept by watch engineer, it is dated at 
6 A. M. when started and returned to office after 24 hours for com- 
putation. It registers: 

f 1 Readings of electrical instruments 
riourly j 2 Units and auxiliaries in use 

3 Meter readings (steam and water) 

4 Revolution counters 

5 0;1 used 

6 ^Men working 

7 Condenser temperature (at 8, 12 
and 4 o'clock) 

Watch engineers do not figure out differences, constants, aver- 
ages or summary, this being done by power house clerk. 

If readings are not taken or instrument was out of order, write 
in a question mark (?) instead of guess figure. 

Keep notes on special occurrences under "Remarks" such as 
interruptions, unusual conditions, accidents, absence from plant, etc. 

Figuring Out Log. The Power House clerk receives both 
sections of daily power house log and before proceeding with figur- 
ing out totals and results secure following information. 

1 Chart showing temperature of water entering economizer 

2 Steam pressure chart 

and finds from the curves average temperature and pressure for each 
of 3 shifts, 6-2, 2-10, 10-6. He then verifies that the time cards 
stamps correspond with log entries under "crew" and that oil used 
is covered with stores issues. He then proceeds to figure out the 
data and results in accordance with the instructions on the subject. 

Filing Log. When log is figured out and daily power plant 
report is made out, the clerk places it on the Chief Operating En- 
gineer's desk who checks it and signs it. The daily power plant 
report is then sent to the General Superintendent and the log filed 
in clamps provided for each month of a year and placed on the 
log rack. At the end of a year last month logs are removed from 
the clamps and placed in transfer file. 



302 



Service Records 

Service records are sometimes available from the power-house 
log but being substantially the records of service rendered to con- 
sumer cannot be complete unless the data of distribution, interrup- 
tion, line and transmission losses, etc., are available besides the data 
of plant output and the form in which the power was sent out. 

In the case of a central electric station, the service record thus 
include all occurrences, phenomena, and data beyond the station 
busbars, comprising lines, transformers, sub-stations, etc., up to the 
customer's entry. In case of a manufacturing plant the service 
records should picture all that happens to power beyond the power 
plant walls and up to the point where the power actually serves its 
purpose, though the efficiency of utilization of that power is not a 
matter of plant service. 

Distribution of Power. Records showing how the power was 
distributed among various places of consumption are important not 
only from the operating view point, indicating what lines and at 
what time are crowded, what is the general tendency of load and so 
forth, but also and particularly serviceable for the general manage- 
ment and service department. In case of a central electric station 
it is frequently advisable to represent such records in form of 
curves on time scale as abscissa and several coordinates like kilowatt 
hours, voltage, frequency, temperature of transformers, etc. In cases 
of manufacturing plants records of distribution are of great value 
for ultimate analysis of the cost of power service to various depart- 
ments and relative economy of use of different forms of power in 
which it may be sent out from the power plant. While this function 
may not be considered properly within the domain of the plant opera- 
tion, such close cooperation between producing and consuming de- 
partments does invariably produce beneficial results for both as 
lessening of waste in consumption and distribution reflects on power- 
plant economy. 

The form represented in Figure 94 illustrates the manner in 
which a manufacturing concern using power in large quantity in a 
variety of forms finds it convenient and beneficial to record the dis- 
tribution of power. The use of these records has led to many im- 
provements and economies making the work involved highly pro- 
ductive. 

Interruption of Service. Records of interruption in service com- 
mend themselves as indispensable either in public service company 
or in a private industrial plant. The activity, comfort, and even 



F- 



UNO AT 8 A. M. 



YEAR 



~ 



FT 







sr 



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r 



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it 









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sncmed: 















































FORM MRS. BEGINNING AT 8 A.M. 






















POWER PLANT LOG 




COAL REPORT 

FOR 


1 II 1 






BOILER ROOM 


TIHI 


IN SERVICE 






FLUE GAS 


STEAM FLOW METERS 


2 i 4 


1 , 3, S A T 


BOILERS 


ECONOM. .: 


.: HEATEF 


s 14 


TEMPERATURES 


BOILER NUMBE 


S 


SOFT 


HARO 


SOFT 


HARO 


, 


, 


3 


1 


r. 


, 


I 2 


! \ 




: 


;." "■ 




1 


2 3 


« 


» 


« 


I 


SE , 


W I 


■ 


' 


• 


• 


' 


' 


















„ 






















































7 






















































e 






















































. 






















































10 






















































,, 






















































12 






















































, 






















































, 






















































3 






















































4 






















































, 






















































«. 






































1 




























































































































a 






















































TOTAL SIFTINGS 


10 






















































TOTAL BANKING BLRS NO 


,, 






















































TOTAL SOFT 


,2 






















































TOTAL HARD 


, 






















































TOTAL COAL FOR SNIFT 


2 






















































, 
























































4 






















































5 






















































BOI 






DRAFT ON BOILERS 


2 A 4 


1,3,5.1 






HARO 




HARO 












"".* 


MIIS. 


— 


I..F. 


OR.FT 






























2 


3 




B 


6 


! 


a 


































- 


O'NPcR 


































FURNACE 


































» 




































FURNACE 


































■ 




































FUHHMT. 


































> 




































FURNACE 


































,0 






































































II 


DAMPER 


































FVHNACF- 


































.» 






































































■ 




































FURNACE 


























COAL STATEMENT 


« 
















































R.R.CO. 


CAR NO 




TIME 


ANTHRA. 


?N T o1l"" 


3 


DAMPER 


















TOTAL BANKING BLRS. NO. 




























TOTAL SOFT 
















' 


































FURKACE 


















TOTAL HARD 
















■ 


OAMPCR 


















TOTAL COAL FOR SHIFT 


















































« 


D.MFCH 
































FURNACE 
































' 


DAMPER 


















































2 & 4 


1,3, 5 A T 
















» 


































FURNAfE 


















SOFT 


HARO 


SOFT 


HARO 








■ 




































UNLOADED IN B4 HOURS 






FURNACE 
























,0 




















T0T4L AVAILABLE 






FURNACE 
























■■ 




















TAKEN TO REFINERY 






FURNACE 


















■rush 4 coys 






I. 


DAMPER 


















USED IN POWER PLANT 






FURNAC. 


















TOTAL ISSUED 






■ 


DAMPER 










































legend: 


■ 


DAMPER 


















FURNACE 


















" 


DAMPER 


















i=> 


■ LACK) MADE BONUS RUINED, 


fu«»ace 




























BSD) LOST 


- - ■'"" 




" 


FURNACE 


















TOTAL SIFTINGS 


CS3 (RED) ABSENT 


_ M 


■ 


FURNACE 


















TOTAL .ANKINO BLRS. NO 


/W\ARUN WITHOUT LOAC 




REMARKS, _ 


TOTAL HARO 






TOTAL COAL FOR SHIFT 


























































1. 





























































■ 24 MRS. BEGINNING AT . A. 




s 

r- 


remarks: 




POWER PLANT LOG 




III! 


ENGINE ROOM 


TURBO GENERATORS 


GENERATORS 


TRANSFORMER 


IN SERVICE 


SUPER.. 


VOLTS 


TEUP. .EARING. 


43 K.W. SB' 


is K.a. .»■. 


SIR CON. 


ce MACH. 


















• 


■ 


j 


• 




1 


a 


o 


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■ 


■ 


3 


■ 


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J 


» 


> 


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,7 ',-; « 








































































c 


































































7 


































































S 





































































































































10 


































































1, 


































































12 


































































1 


































































2 


































































.) 


































































4 


































































6 


































































o 


































































7 





































































































































s 


































































10 


































































,1 


































































12 


































































1 


































































2 


































































3 
































































4 






























































1 1 ■ 


STEAM FLOW METER, MFG. 


REVOLUTION COUNTERS 


SHirr 


LAST HMD. 


PSCV. READ. 


oirr. 


TIME 


ICC MACHINES 


PUMPS 


1 








VR-13 


v«" 


VR-33 


VA-.0 


VH-IO 


VH-20 


VH-10 


VW-2 


WW'S? 


VF-I 


a 








2-P.M. 






















3 








S-A.M. 
























TURBO CONDENSER RECORD 


WATER METER NO. 1, house 
























1G-P.M. 






















TIME 


VG-.4, 


VG-22 


WG-32 


,"*«; 
















































' 








DIFF. 






















■•ft.ll. 


















2 








.-A.M. 






















II-A.M. 


















3 








10-P.M. 








1 












*-P.M. 


















WATER METER NO. 2. oamper 


OIFF. 








" ■ I 












e-p.M, 


















shift 








REPUBLIC STEAM FLOW METERS 


OIL USED GALS. 




























shift 


METER 


ST.RT 


ENO 


OIFF. 


LBS.WATEF 


STMBOL C 


VLINOER TU 


RBINE 


ENGINE 


ENGINE ROOM CREW 










3 








1 


, 










SHIFTS 


2 


3 i 


2 3 


i 


3 




WATER METER NO. 3, hydraulic 


, 






















NAME 


NO. 


JOB 






MR*. 















































































1 








4 




































3 








B 












































, 




































WATER METER NO. 4, return 




























TOTAL 




































SHIFT 








2 


, 












































2 






































































3 








3 
























signed: 




WATER METER NO. S, heater 


4 






















„ 
























*_ 


it SHIFT 


I 








, 


























> 








TOTAL 






















z. 




Sri - 


> 








3 


































WATT METER NO. 1 


2 










TOTALS 












SHIFT 








, 










SUMMARY DATE 






SHIFTS 










4 




































3 








S 










COAL CONSUMED. BANKING 








WATT METER NO. 2 


7 


















WATER EVAPORATED 








TOTAL 


























i 








STEAM FLOW METER, TOTAL 


















a 








SHIFT 


"™ 


ENO 


START 


OIFF. 


TOTAL 










» 
















WATT METER NO. 3, m.g. set 


, 


' 










tmCIENCt DP .OILER. 








SHIFT 








2 


. 










R W.H. GENERATED 


























































* 














































% OF IDLE PLANT CAPACITY 



































Fig. 93.— Log of a Medium Size Mill Power House 
This log is split into two sections: for boiler house and engine room; each section is kept separately because of arrangement of the plant; both halves : 
pasted together in the plant office next morning when checked and calculated. 






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303 



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N «*5 r}< io NO *■» 00 

c* cs cs cs es n es 



304 

safety of customer depends on uninterrupted supply of power. 
Manufacturing plants or transportation lines cut off from power 
supply even for a short time suffer sometime very serious loss or 
damage and therefore any cause, duration, location and nature of 
interruption must be carefully recorded, and analyzed and clearly 
presented, serving both as an explanation and as a lesson for future 
avoidance and safeguarding against. 

The data for the records of this nature are collected usually by 
the load despatcher or, in smaller plants by operating engineer. The 
presentation of these facts gains in clearness and usefulness if, in- 
stead of merely being written down on a log are also presented in a 
graphic form. A convenient and successful method of recording line 
interruptions is illustrated in Figure 95. It is a straight line record 
extending over the period of 24 hours analyzing troubles and inter- 
ruptions first as to cause, such as : lightning, grounded line, substa- 
tion failure, power-house failure, accident to man, repairs, insulator 
trouble, and any other cause. Next the trouble is allocated to a line, 
section substation, branch, customer or in any other desirable manner. 
For the period of any interruption a red line of its duration is 
drawn to time scale both opposite the cause and on the line involved ; 
if disturbance was of a momentary character so that a line would 
be too short, it is checked at the time with a letter symbolizing the 
nature of disturbance written on top such as R — denoting resistance 
in — resistance out, etc. Systematic study of such records was 
found extremely serviceable in developing needed improvements for 
material reduction of main or more frequent causes of interruption. 

Character of Service. Finally the records classifying and analyz- 
ing the service as to its character shall not be omitted, as information 
secured along these lines inevitably lead to both improved service 
and increased economy. It has been thus recognized in many in- 
stances that a change from direct current service to alternating cur- 
rent offers so many advantages that the investments necessary for 
such change are desirable both for the community served and the 
concern rendering service. There is still a large field of meagerly 
investigated questions of similar nature and financial reports alone, 
which without full elucidation and support by fundamental facts dis- 
closed by service records, are frequently misleading and either retard 
the progress of the community or drag the public service company 
into financial embarrassment. 

Similarly, in an industrial power plant, generating electric, pneu- 
matic, hydraulic and direct mechanical power, besides furnishing 
refrigeration, live and exhaust steam for manufacturing processes, 



305 

etc., it is sometimes a vital problem to find out the corresponding 
efficiency of each kind of power, and thus furnish the basis for 
determining relative economies in their use. In many instances the 
departments using certain kinds of power (compressed air for in- 
stance) are not at all certain that it is cheaper than motor drive. 





















































/^ 




^ DAILY TROUBLE AND INTERRUPTION REPORT por ~* 


CJ rz: 


// 


//7~ 




OURS ENDING I""""™ 




TEAR 


' M6UM 


CAUSE 

IMWTMIM 

Or.-.-OND 'JNE 
m^t STATION 
r-OW'R MOUSE 


1 


2 


3 


1 


5 


3 


r 


3 ( 


> 1 


1 


1 1 


2 


1 


2 


3 


• 


5 


3 


r e 


i 10 11 12 


REMARKS 


rta;rs 

46000 VOLT LINES 
ft-tfHI 

a-UNe 

C-LINE 

SOUTHERN CAMBRIA 


= 






L^ 


d 






= 




— 








— 






LZZ 












— 


= 




NORTHERN CAMBRIA 
V.NYARD TAP 
0A1.UTXIN LOOP 

11000 VOLT LINES 

WATER STREET 








= 








































— 


HUNTWO.PON 

eeoo VOLT LINES 

YEAOCTTOWN 

l.»*l»TO*« SILK MILL8 

GRANVILLE 

KORRELL 

OCLANEY 

H0LU0AY8BURO 

BENS CREEK MINES 


















_ 


' 




















-=- 


; — ■ 








PORTAQE BOROUQH 
ST. BENEDICT 

'~ : 1 

8300 VOLT. LINES 

McVCYTOWN ■ 
MOUNT UNION 


' ■ - 
1 ' 






,pj 


u=! 




= 




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s 


n 


5 


__ __ 


MAPLETOWN 

2200 VOLT LINES 

i.l'*|BTOWN 

HUNTINGDON 

ALEXANDRIA 

PETEBSBURO, 

V.IVTER STREET 

TYRONK 








izz 




























r— 










SKHtD.^&£ti3&C 2S5s-.«Mif»' 


HOU1DAYSBURO 
GALUTXIN,, 
TWIN ROCKS" 




















sis 




























==H 


8IGN£0.„./f^£ 




1 

■ 



Fig. 95. — Daily Trouble and Interruption Report 

It visualizes affected feeders and lines as well as indicates graphically duration 
of interruption and time of occurrence; cause of it is indicated both in classified 
top section and by symbol letter. Space for remarks is provided for more detailed 
report by load despatcher. 

Similar questions are becoming particularly important in shops where 
substitution of one kind of power by another does not require change 
of equipment but merely methods. Again no change of equipment 
should be decided upon unless the cost of service is firmly established. 
Almost all the tests and calculations are misleading, so long as they 
do not account for leaks and other losses in distribution and use 



306 

which might entirely upset the cost of generation alone. Accurate 
records of such a nature are capable of throwing the correct light 
on the problem. Figure 96 shows that in a large machine shop, after 
the efficiency and cost of different forms of power were studied 
from a set of comprehensive records, efforts were made to use a 
least expensive form whenever and wherever possible. The result 
was very material reduction of power-plant expenses, although some 
of the departments had a somewhat larger power bill than when it 
was lowered at the expense of other departments. 

In a plant manufacturing electricity for sale a complete set of 
records differentiating between direct and alternating current as 
well as between 25 and 60-cycle output of the latter are almost 
always kept, though not always properly used. As a result in deter- 
mining the bus-bar cost these differences are frequently disregarded 
and the customer's rates are not necessarily adjusted according to 
the cost of manufacturing various forms of electric power. 

Construction Records. The effect of rapid construction or alter- 
ation and additions to plants on its first cost is not always clearly 
realized. It is reported that in academic cloisters sometimes time 
passes unheeded, but the plans laid out for productive work or for 
construction of means of production without due regard as to time 
consumed are of no use. 

Perhaps managers of capital would recognize clearly enough the 
disadvantage of slowing down the completion of the work from two 
to three years in order to gain 42 per cent instead of 34 per cent 
upon the fixed capital. But when the question lies between different 
lengths of time under a year, for instance between three, four or 
five months, it is frequently the case that the advantages of quick 
work remain wholly unrecognized and neglected." 4 

It is of importance to carefully lay out the schedule of work 
contemplated, and definitely determine the task as to time when 
materials shall be delivered, which operations precede and which 
follow and when each shall be completed. This obviously is not all. 
"The road to hell is paved with good intentions," and we should 
have a clear, continuous record of progress if we want to know 
whether we are living up to our task and if not, where and how 
much, we are behind the schedule. 

Waste of time in any activity giving advantages to those who 
do not wait and this means more than financial competition. The 
whole trend of our progress, the entire development of our technique 
is characterized in two words, "time saving." From high-speed 
steel to the fastest aeroplane, from short-hand notes to wireless 



307 

telephone, everything is calculated to accomplish the most in minimum 
time. Since sanitation, hygiene, and medical arts, are as yet hardly 
able to appreciably prolong our life, it became a task of an engineer 
to make possible for one to accomplish most within his limited life- 
time. 

Upon the insistence of the author, at that time Power Expert 
for the United States Shipping Board, Emergency Fleet Corpora- 
tion, several public utilities began to use construction records in 



Diagram Showfng Per Cent 
Distribution of Power Generated and Purchased 




Fig. 96. — Power Distribution Record 

A large manufacturing concern using power in four different forms used this 
diagram to study relative expenses of various forms of power. It led to a material 
reduction of fuel consumption by substitution of some forms of power by another 
for use in the shops. Circular form of percentage distribution is lacking clear- 
ness which straight line charts have. 



a graphic form, plotting charts in straight line representing 
the part of work done against the time scale allowed for the 
work. By days, weeks, and months the length of the bar show 
how much of schedule work was accomplished each day or month, 
a heavy summary line indicating the progress of work to date of 
the record entry. Any delay was explained by a symbol denoting 
the cause of same thus helping the supervising official to render his 
service and direct efforts in eliminating the cause. Figure 40 illus- 
trates a similar record of progress in construction of boilers. Ob- 
viously the same method is equally adaptable to erection or any 
other work. 



3o8 

Analyzing Data 

As anything so detailed and complete as the elaborate large log 
is liable to be filed away before the man in charge of the plant opera- 
tion gets the benefit of its study, a concentrated summary should 
be made either on the log or on a separate slip, for the quick in- 
formation of those primarily interested in the results, while any 
further information could be secured from the complete log, instru- 
ment charts, etc., whenever a detailed study of operating conditions 
is needed. 

As it has been said in regard to men's performance, the record 
of their living up to their task must be analyzed before the same 
crew comes back to work in order to secure the benefit of experience 
and prevent the recurrence of mistake (see Figure 97), so it is with 
the general performance records. In fact in only a few cases can 
the judgment as to man's performance be formed without a close 
study of all the conditions under which he performed his work; 
hence, the analysis of all records in practice does not follow, but 
precedes, the determination as to whether the work was done well. 
The amount of work required is by no means large or prohibitive 
even for a small industrial plant, but the benefits derived from such 
close study, leading to continuous improvements and prevention in 
the very beginning of any deterioration of efficiency, are so large as 
to warrant the employment of a well-paid and highly-trained engineer, 
with a keen analytical mind. In our experience such scrutinizing and 
summing up of the day's log and other records usually takes but 
a small fraction of the time of a study-man or planning engineer. 
The balance of his time is utilized in further experimentations and 
training of help. 

The analysis of records covering the conditions and results of 
operation gives the clue to the real mastering of power production. 
Opinion and judgment have no room or excuse since it is obvious 
that any guess not based on the positively established facts has at 
least as many chances to be false as to be right. When, however 
we take into consideration that in all guess work, opinions are formed 
not on the basis of all influential factors but on the most conspic- 
uous ones only, it becomes evident that omission of one factor, or 
a wrong assumption of any, necessarily leads to a false conclusion. 
The empirical proof of this statement is obtained in every case where 
full records are not kept, or, if kept are not carefully studied. 

In such plants a large margin for economy is invariably present. 
The author emphasized this fact at the annual meeting of The Amer- 
ican Society of Mechanical Engineers in 1917 suggesting the estab- 



3°9 

lishment by the United States Fuel Administration of a priority- 
ruling on coal deliveries to those concerns that have and use their 
records correctly. The United States Fuel Administration in a cir- 
cular letter of June 12 admitted this viewpoint by announcing the 
appointment of inspectors for investigation of the operating efficiency 
of power plants. A new principle was hereby accepted, though not 
yet clearly formulated, that the natural resources of the people may 
be entrusted only to those who know how to use them for the public 



(OHM SA1300 



// 


3 


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MONTH 


OAV 


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i Have investigated and Report Below The 

Cause of Lost Bonus 



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DISTR. 



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>ition %fe &>/<2 J*-*^*- J&£uli&U. <PMl€<i<*j^fr? <f4£0^ 






fieSPONSIBIUTY IS ALLOCATED TO 



ReMED Y 'TENDED TO BY MC - ^ ^ad ? /*^ g^yC<g^ 



Fig. 97. — Result of Work Report to Individual Employee 
Before an employee returns to work next day the results and quality of his 
work is figured out and, if below normal, cause of failure is ascertained. The man 
finds this slip in his card holder instead of a slip for secondary wage. If the cause 
of poor efficiency is allocated to another party or to Purchasing Dept. manage- 
ment, etc., a different colored slip is used to absolve the individual from responsi- 
bility. 

benefit and can prove that they have that knowledge, while those who 
recklessly or selfishly waste the national wealth are denied the oppor- 
tunity to benefit themselves at the expense of the people. 

In practice, the task of analyzing data is preceded by two separate 
problems (1) calculation of ratios, efficiencies, losses, expenditures, 
etc., and (2) presentation of facts thus disclosed to the proper party 
in the proper form. Let us now briefly review these functions. 

Calculation of Records 

The calculation of data collected on various records should be 
done by one in close contact with the work and possessing an inti- 



3io 

mate knowledge of processes, of significance of data, etc. If all 
this figuring is done in the office, the touch with conditions may be 
lost, meaning of certain factors misunderstood or overlooked and, 
above all, time will be lost, between an improper operation is dis- 
closed, inquiry made, facts checked, explanation received, and final 
steps made to ameliorate the condition which should have been 
promptly and directly corrected as soon as noticed. The value of 
records will be still more greatly reduced if calculated by a mere 
clerk or, worse yet by a machine for final results alone frequently 
obscure the cause and render no opportunity to get at the bottom of 
the trouble. 

If a man is frequently absent or is periodically missing his task, 
he must be interviewed at once in order to explain the bare fact of 
his absence or poor work and the cause thus disclosed is recorded 
for it is essential to know why such was the case. Records of such 
facts must be always amplified by reasons why. Similarly idleness 
of equipment records, to be of full value must be supplemented by 
reference to the cause. Performance records, perhaps more than 
any other, call for prompt and competent scrutiny as to complicated 
interplay of causes. In this way low efficiency of evaporation if 
merely recorded on a report is but a danger sign and it is the func- 
tion of one who calculated this efficiency to find out whether it was 
due to poor maintenance of equipment, unsuitable fuel, irregularity 
in load, improper handling of fires, etc. In the latter case he should 
find out why the firing was done poorly. It might have been a 
consequence of wrong indication of instruments causing wrong ad- 
justment of draft, etc., or it may be that the man was requested to 
work two shifts without relief, or a green fireman was on duty 
without instructor's help or anything else. Thus we have come 
again to the conclusion, that the inspector and instructor should be 
one person so far as possible if the best of results are to be had. 

Inasmuch as a man of this type usually has not much time for 
desk work, calculation of records should be made as simple and 
quick a proposition as consistent with taking into account all con- 
tributing factors. Slide rule must take place of pad and pencil and 
specially laid-out diagrams and calculators to be preferred to both; 
yet there must be a caution since any short cuts jumping over inter- 
mediate results must be condemned as they are liable to obscure the 
important fact : at what stage the efficiency of the process falls below 
standard. If we could at one sitting of input against output read 
ultimate efficiency such device must be unconditionally condemned, 
because we must know individual effects of the quality of fuel, 



1 Temptrature on shdm 3 Scale apposite rntlnters, 



— , r _ _, - rr v-. .. ■'■**"'«.jtcj-.onr<^ rw i~ntr" above 

Btoxi/iXtorof E ipavtmi ■•■--■■.■■- ; -. tyrtStettwttMLwFts&kvr&afalmyesito'ArrM 

\- From tfrf Intersection fof/ott Vertically Upward andrvod few'ta/en 




Temperature .Degrees Fahrenheit 
Actual Evajjoration 

Fig. 98.— Calculating Board 

This combination of two diagrams with a slide rule between gives at one setting the equivalent evaporation from known steam 
pressure, superheat, temperature of feed water and apparent evaporation, ratio of and equivalent evaooration. 



3ii 

temperature of feed, quality of steam and sometimes a few more 
things. 

For the purpose of reducing the time consumed in calculations 
involved in summing up and determining efficiencies, various ratios, 




Fig. 99. — Power Plant Log Calculator 
This device, copyrighted by the author in 19 13, is laid out on logarithmic 
principle with several specific constants introduced. With its help all log data and 
daily performance report (as in Fig. 102) are calculated for three shifts in a few 
minutes without the aid of pencil, paper, slide rule, etc., with accuracy exceeding 
that of instrument readings themselves. 

etc., and in order to avoid tedious and unreliable references to steam 
tables, a set of well-drawn diagrams or slide rule may easily be pre- 
pared. The use of such devices not only insures much greater 
speed, since a sufficiently correct interpolation can be made from a 



312 



conveniently plotted curve more quickly without the need of further 
figuring. The accuracy of the results is at least as high as that 
of the instruments furnishing the basic data. 

The first example (see Figure 98) is a convenient combination 
of two diagrams, interconnected by a slide rule. The right-hand side 
diagram (based on Marks and Davis Steam Tables) has steam pres- 
sure and corresponding temperature as abscissa scale and as ordinate 
total heat in steam of different qualities as projected from curves. 
By setting opposite the ordinate scale of B. t. u. in one pound of 
steam the temperature of feed water, the factor of evaporation 
may be read on the ordinate scale of the left-hand diagram, opposite 





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Prom "Graphic Methods for Presenting Facts" by Wlllard C. Brlnton 

Fig. ioo. — Hollerith Card as Used for Classification of Expense Data 

the arrow-mark on the sliding scale (which in the setting illus- 
trated is 1.146). With the aid of the left-hand diagram the equiva- 
lent evaporation per pound of fuel is determined by projecting from 
intersection of given apparent evaporation curve (diagonal line) 
with factor ordinate to the abscissa scale (on top). Thus with 
apparent evaporation of 1 :8 and factor as set above the equivalent 
evaporation appears to be slightly less than 9.2 (9.168). The ac- 
curacy of such crude interpolation is as high as 99.66 per cent. 

Another example of power-plant log calculator (see Figure 99) 
is based on a logarithmic principle with a number of useful constants 
introduced in laying out special scale. "The instrument consists 
of a logarithmically divided disk (inner scale) centrally revolving on 
a similarly divided dial (outer scale). The divisions are from 1 to 
10 and any multiple of 10. Additional graduations are made for 
constants for the determination of the thermal efficiency when fuel 




From "Graphic Methods for Presenting Facts" by Willard C. Brlnton 

Fig. ioi. — Machine for Classification and Sorting of Hollerith Cards 



3 X 3 

or different heat value is used. On the outer scale of the dial grad- 
uations are made which are constants for the determination of the 



STRATHMORE PAPER COMPANY. 

DAILY PERFORMANCE REPORT 

Ml TjINEA GU& STEAM PLANJ 



3 


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Month 


Day 


Year 



Fi reman on Duty 



1st Tour 



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2nd Tour 



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3rd Tour 



T 



Average Steam Pressure LQS . PF3 «5# ///• 



^4- 



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Temperature of Feed Water— P 



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Factor of Evaporation 



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-1*2- 



1.0^ 



Coal Used (Total)— Lbs. 



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-CoaJ Used (Banking Excluded) — Lbs. 



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Water Evaporated — Lbs. 



31 L o w 



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Apparent Evaporation 



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Equivalent Evaporation 



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Efficiency of Steam Generation 



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Cost of Coal Per 1000 Lbs. Steam 



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Colorific Value of Coal — B. T. U. as Fired 



Ash — Laboratory Report — Wet Basis 



Moisture — Coal as Fired — % 



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Coal Consumed Total — 



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Fig. io2. — Short Form of a Daily Performance Report 
In practice at times higher executives having no time to analyze power plant 
log are kept in touch with daily performance of each shift by means of such 
short summary. 

cost of fuel for the generation of 1000 pounds of equivalent steam. 
They are based on the cost of 1,000,000 B. t. u. Equivalents for 
ready interpretation of horsepower and kilowatts in heat units and 



314 

cubic feet of water at various temperatures into pounds are also 
marked on the disk and dial. In the center of the disk is a diagram 
for the determination of the factor of evaporation for saturated dry- 
steam. Instructions for the use of the chart follow : 

"Weight of Feed Water — Set 10B opposite the Wilcox water- 
meter reading found on the dial. The result in pounds appears 
on the dial opposite the feed temperature marked on the disk. 

"Cubic Feet into pounds — Set 10B opposite the number of cubic 
feet on the dial. The result in pounds appears on the dial opposite 
the observed temperature. 

"Steam Consumption per Kilowatt-hour or Horsepower-hour — 
Set the kilowatts or horsepowers of output on the disk opposite the 
number of pounds of steam consumed, read on the dial. The result 
in pounds per kilowatt or horsepower-hour appears on the dial oppo- 
site 10B of the disk. 

"Fuel per Unit of Output — same method as above. 

"Actual Evaporation — Set the number of pounds of fuel, read 
on disk, opposite the number of pounds of water evaporated, on 
the dial. The result appears on the dial over 10B of the disk. 

"Factor of Evaporation — Find feedwater temperature at the left 
of the diagram in the center of the chart and follow the horizontal 
line to its intersection with the diagonal line representing gage pres- 
sure; then follow the vertical line down and read the factor of 
evaporation at the bottom. 

"Equivalent Evaporation — Set 10B of the disk opposite the factor 
of evaporation number on the dial. The result appears on the dial 
opposite the actual evaporation number on the disk. 

"Efficiency of Boiler and Grate — Set the heat value factor (B. 
t. u. per pound of fuel) shown on the disk opposite 10A on the 
dial. The result appears on the dial opposite the equivalent evapora- 
tion number on the disk. 

"Cost of 1000 pounds of Equivalent Steam — Set the observed 
efficiency number on the disk opposite the cost of 1,000,000 B. t. u. 
in the shape of fuel shown on the outer scale of the dial (which is 
designated for calculation of cost, but does not show the cost). The 
result appears in cents on the dial opposite 10B. 

"Load Factor — Set the number of kilowatts in the peak power 
load on the disk opposite the number of average power read on 
the dial. The result appears on the dial opposite 10B. 

"Thermal Efficiency of the Whole Plant— Set 10B of the disk 
opposite the constant for kilowatts or horsepower printed on dial. 
Note the point on the dial opposite the output number on the disk. 



315 



Set the disk's figure of pounds of fuel consumed under previously 
located point on dial opposite 10B. Set again the disk so that oppo- 
site the point thus found will be the number of B. t. u. per pound 
of fuel used. Do not use constants for the determination of boiler 
efficiency. The result appears on the dial opposite the 10B mark. 

24 
25 
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Fig. 103. — Report to Fuel Agent 
This graphic report shows at a glance deliveries, their quality, their use, results 
secured, clearances from docks, RR. deliveries, coal analysis of every barge and 
for any day when coal was used, also balance on hand daily and at the end of the 
month. See text. 

"Use as Slide Rule — Any multiplication can be made following 
the rule for determination of equivalent evaporation and division by 
following the rule for load factor. All these calculations and others 
not mentioned can be made quickly and accurately with the calcula- 
tor." 

Presentation of Records 

The presentation of the worked-out records offers special prob- 
lems whose solution depends largely for whose use they are intended. 



316 

Data forwarded to cost and payroll clerks should be prepared in 
form of numerical tabulations or even in sorted packages of time 
cards and stores-issue cards. These may be in some specific cases, 
not of the usual kind described elsewhere in this book but in form 
of Hollerith cards (United States Census machine), properly punched 
to indicate district, purpose, charge symbol, date, nature of record, 
item, cost, amount, etc. (see Figure 100). Cards of this kind can 
be simply and quickly sorted, tabulated, etc., by means of machines 
(see Figure 101) but in all cases the responsible heads of depart- 
ments must previously examine same to insure personal contact with 
all the little "shop incidents" as otherwise this intimate touch being 
lost in machine handling of human records, cooperation and personal 
relations can easily be impaired. 

Most if not all records should be analyzed and examined daily 
to insure prevention of repetition of yesterday's mistakes or failures. 
Some of the summaries made for the information of officials higher 
up may be made weekly, provided the executives having direct 
charge and control over the particular phase of the work receive 
daily their detailed reports. 

This log may be condensed and summarized on a short daily 
report form (see Figure 102) while the general storekeeper or pur- 
chasing agent will find adequate information in a chart sent to him 
weekly or even monthly (see Figure 103). The chief operating 
engineer will be benefited by having a board with adjustable strings 
pinned each day or every eight hours to represent the fluctuations 
and general trend of such operating factors in which he is particularly 
interested (see Figure 87). Men must by all means have easy and 
simple means of watching the records of their own progress. 
Sometimes a board is placed in a small power house to represent 
graphically efficiency of each shift for every day of the week, while 
Figure 104 gives a particularly interesting example and proof that 
the men, once in the game and realizing that upon their efficiency the 
happiness and welfare of the community largely depends, do not 
care even to wait for the bulletin board being filled — they keep their 
own score and draw in a chalk a diagram on the boiler front showing 
relative merits of their work. Note the mark "Shifts 1 and 2 — tie" 
and try to get the psychologic meaning. Moreover, do not fail, in 
studying this photo to pay due attention to the method of graphic 
presentation used, which is accepted by us as the most! simple, 
intelligible and obvious manner of presenting facts and scheduling 
jobs. 

The charting method of presenting the most essential facts to 




Fig. 104. — Who is Who in the Boiler Room 

Diagrams like this on Fig. 107 are frequently drawn by firemen on the walls or 
boiler fronts to visualize their own accomplishments. It indicates that interest 
in the work is created and work has lost monotony since it is done with intelligence 
and sporting spirit. Base ball scores have less interest than these boiler room 
scores against the bogey — the length of the scale. 



3i7 

busy officials has proved to be the most satisfactory method. It 
answers our fundamental requirement that the records, to be of 
real value, must have a basis for comparison of what is done with 
what could and should have been done. It answers the demand 
that they should be easily comprehensive to the official as well 
as to the workman actually doing the work. It satisfies the 
demand that the cause of any loss is plainly allocated and finally 
it permits differentiation between losses due to poor management 
and those beyond the control of the management or men. For these 
reasons the claim is made that such records are helpful for master- 
ing power production while a majority of other methods lead only 
to dissatisfaction or deception. 

The three principal charts, ^picturing the operating progress and 
perfection in any plant are : 

1 Equipment utilization chart 

2 Fuel utilization chart 

3 Skill utilization chart. 

Below we give a brief description of each with reduced repro- 
duction of sample charts : 

Equipment Utilization Chart. This chart (see Figure 105) 
shows what percentage of plants capacity is used and what does it 
cost to have excessive equipment idle. Those familiar with Gantt's 
method of determination of the cost of idleness will at once note 
the similarity, yet the difference is profound and important. Power 
generating equipment differs from machine equipment in two re- 
spects : first, the output of the steam or electric generator depends 
on load or demand, rather than on time ; second, the demand or load 
fluctuates within twenty-four hours irrespective of the planning of 
work in the plant. As a result of these peculiarities we must con- 
tent with such a fact as peak and provide for it sufficient spare 
capacity which remains idle rest of the time unless the off-peak load 
is secured. In a purely lighting plant the idle time of equipment 
will be very large while in a power plant serving a manufacturing 
concern load may be so uniform that idle time is brought almost to 
zero. Again a break down of a machine tool in a group of several 
similar machines is not nearly as serious a matter as the disablement 
of a large electric generator or ot one of the few boilers. The 
spare protective equipment, therefore, frequently constitutes a large 
proportion of the total installation and its idle time is an inevitable 
large burden. Finally, periodic overhauling and cleaning of power 
generating units is, as has been shown before of great importance 



318 

for the economy of operation and, if units are of comparatively large 
size and few in number, the portion of idle time due to maintenance 
is also considerable. On the other hand, such causes of idleness of 
equipment as iack of operators, lack of materials, etc., are practi- 
cally non-existent in a power plant except in very extreme cases. 
The causes of idleness of power equipment are therefore analyzed 
usually only as to following: 

1 Reserve for peaks 

2 Reserve for break down 

3 Reserve for maintenance 

4 Lack of load. 

In a factory power plant with usually uniform load throughout 
a day weekly or monthly total possible output of the equipment can 
easily be determined, and percentage for spare, based upon full 
available output, arrived at. Actual output for the period being 
short of that possible to satisfy, is shown as the percentage of plant 
equipment used while the balance is idle burden. More work for 
the factory, enlargement of manufacturing activity, extension of 
factory power consuming equipment or sale of excessive power gen- 
erating equipment is indicated in cases of continuously high idle 
overhead on power equipment. 

In a public utility central station the analysis is of necessity more 
complicated but the benefits derived therefrom are also greater. 
Charts of this kind should always be placed before the new business 
department to direct their efforts in proper direction and to warn 
them against securing loads tending to render operation unsafe or 
wasteful. A thorough study of such equipment utilization charts 
made by a number of plants in a locality would be invaluable, as 
indicating the lines of cooperation to mutual advantage with possi- 
ble material benefit. It is important in such cases as the detailed 
analysis of the use of various classes of equipment within different 
plants throughout the year would clearly show, what the inter- 
connection of idle and overloaded plants may accomplish. Small 
isolated plants should be equally profited by carrying out such 
studies as the results will plainly show possible merits of cooperation 
with central-station service, either throughout the year or during 
certain seasons. More detailed explanations as to keeping such 
records will be found in the chapter on Mastering Expenses. 

Fuel Utilisation Chart. This chart (see Figure 107) serves to 
show at a glance whether the fuel is being utilized to advantage and 



319 





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if in excess of reasonable amount — to what extent the loss is pre- 
ventable. The general lay out of this chart is based on the same prin- 
ciple of comparison of what has been done with what should be. If 
in a given plant reasonable rate of evaporation is say 1 to 10 then on a 
day or watch when for instance 900,000 pounds of steam were gen- 



321 



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322 

erated, the reasonable fuel consumption should have been 90,000 
pounds; if actually 100,000 pounds of coal was used the line will 
be 111 per cent of the space for the day, indicating 11.1 per cent 
incurred loss drawn as a second line on top. 

The study of fuel utilization carried in this manner immediately 
attracts the attention of those in authority and invites further studies 
tending to disclose the means for elimination of losses. Charts of 
this nature carried even for a comparatively short time indicate as 
well the extent of the losses ; in other words tell the executives how 
much effort and what expense are warranted for the elimination of 
the losses incurred. Several actual cases of studies conducted by 
such means are described elsewhere in this book. 

Skill Utilization Chart. This chart (see Figure 108) is de- 
signed to represent visually the results of application of special skill 
by each member of the crew or each gang of men in securing the 
desired possible result on plant operation. In spaces provided for 
each man for each day lines are drawn to indicate that the work 
was performed for which wages were paid; if the work was of a 
quality equal or in excess of predetermined standard, a second heavy 
line is drawn on top of the other, indicating that extra skill was 
applied for which a secondary wage rate was paid. Should man be 
absent no line is being drawn, indicating that he failed to do his 
work. The top space over the graphic record space is provided 
for a suitable symbol denoting if a man failed to exercise required 
skill — the reason for such a failure, for instance : 

iz=z fatigue 

s= sickness 

n=negligence 
gr=green operator 

t=temporary or time work 

x=cause not ascertained 

z= absent, 
etc. 

Under this chart representing the exercise of skill by any group 
of men a curve may be drawn to advantage representing the fluctua- 
tion of efficiency in the particular process controlled or attended by 
the above group, thus establishing the relation between the exer- 
cise of extra skill and perfection of results attained. In case of 
payment of secondary wage-rate the chart shows who and when 



323 



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324 

earned additional payment and in what relation savings accomplished 
stand to extra compensation earned. Finally study of letter symbols 
for each man and every day will direct attention of the executives 
to the most important causes standing in the way of the exercise 
of special skill. By proper measure harmful cause can be eliminated 
and the efficiency of men and processes brought to a desired high 
level. 

Inasmuch as in every case the use of these graphic studies of the 
three main elements depends on the comparison of actual performance 
with the predetermined standard, careful study of possibilities in 
each case must be accurately made by a trained investigator. 

Using Data 

To sum up the foregoing outline of the essentials of plant rec- 
ords, we might say, without exaggeration, that the best methods of 
statistics as well as the most excellent records are of no avail unless 
proper use made of it. Men, machines, materials, and time have only 
potential value until they are put to some useful work. Most fertile 
soil produces but weeds unless cultivated. Similarly a collection of 
records is a dead ballast, or at best mere potentiality like a locked-up 
library until there is some one to study the significance of its con- 
tents and to make use of the knowledge gained. 

The knowledge disclosed by facts on the record, like anything 
else may be put to a right as well as to a wrong purpose. In politics, 
secret diplomacy is becoming rapidly discredited as it leads to sus- 
picion, conspiracies, defensive and offensive pacts, oppression and 
wars. A parallel situation is evident in industry. Men ignorant 
as to true facts in industry cannot be expected to act wisely neither 
in daily relations nor in cases of conflicts. Owners and their man- 
agers superficially informed do frequently base their policy on 
fallacies born out of prejudice or opinion instead of on actual 
facts. The public either tolerates service uncommensurate with 
compensation extracted or rebels against conditions of which they 
do not know the truth. Natural resources are wasted at a terrifying 
rate for the lack of knowledge or stimulus to change the routine. 
Industrial relations as well as future welfare of the commonwealth 
are in constant jeopardy because of lack of definite knowledge and 
secret facts. 

The welfare and happiness of the community demands that: 

1 The conduct of industry be based on facts, instead of opin- 
ions as has been too common in the past 



325 

2 Industry be placed in charge of men who are capable of 
understanding facts and of taking the proper action in 
accordance with them. Those who proved incapable should 
be dismissed or placed under a competent guidance. 

To satisfy this requirement of wholesome evolution of our indus- 
trial life, the management, the workers and the community must 
base their action on facts and for that purpose the fundamental 
records should be available to all parties concerned. 

The management will find proper guidance from such records 
in its task of 

1 Rendering necessary service, that is, studying existing de- 

mand and providing lor adequate supply. 

2 Conserving human and natural resources, that is, studying 

existing practice, revising and improving same in order 
to eliminate all preventable wastes and losses 

3 Rewarding service received, that is, studying service ren- 

dered by every number of the personnel, showing proper 
recognition of meritorious service and adequately reward- 
ing for the value of service received. 

The employees will find facts from complete records indispen- 
sable for: 

1 Attaining results which are expected of them by manage- 

ment and by public 

2 Securing skill through requests of instruction, help and 

assistance from management and experts, needed for attain- 
ing best results 

3 Representation in management which, until the shop repre- 

sentatives or committee men, etc., are fully informed as 
to actual conditions is necessarily falling short of accom- 
plishing their aims. 

The public or rather the community served should similarly have 
access to the industrial records either through public service com- 
missions or some other representation in order to know: 

1 Whether necessary service is rendered or not; if not, why 

not? 

2 Whether the service rendered is commensurate with the 

rates charged 

3 Whether the conservation of natural resources is taken care 

of by maintaining highest possible efficiency. 



326 

Of these only the first two are so far within the scope of public 
utility commissions* functions, while the last, obviously the most 
important one from the viewpoint of the national welfare and the 
future of the country, receives no adequate attention. The 
rates for the service themselves could not be intelligently exam- 
ined and adjusted unless the records of operating efficiency are the 
matter of public knowledge. A company using six pounds of coal 
per kilowatt hour may show a deficit on the balance sheet, but if 
its equipment, nature of service, etc., permit under better operating 
practice generation of one kilowatt hour with only three pounds 
of coal the petition for increase of rates should be taken with a grain 
of salt, for this possible saving of 50 per cent on the fuel bill may 
convert deficit into profit. In the author's memoranda to the Secre- 
tary of the Interior, dated July 28th, 1919, the following passage 
referred to this subject brought his favorable commend. 

"Paradoxical as it may appear, it is nevertheless often true that 
a private company wasting fuel does not suffer appreciable loss 
thereby, and succeeds not only in transferring the expense of such 
waste to the public, but moreover, often charges the same public with 
the interest thereon. To illustrate without being specific, many pub- 
lic utility companies petition the public service commissions to 
permit the advance of rates for electricity or fares. The public 
service commissions, in granting such petitions, act on the presump- 
tion that the efficiency of plant operation in the plant concerned is 
as high as the state of the art permits, which in point of fact is 
far from being the case. The authorities should require, as a 
means of keeping in touch with actual progress of the elimination 
of this waste, a simple chart — to be kept and reported weekly or 
monthly to the power bureau — showing on a percentage scale the 
relations between the coal consumed and that allotted." ( See Figure 
107.) 

According to the Division of Power Resources of the Geological 
Survey, all public utility power plants in the United States con- 
sumed on the average over 3.1 pounds of coal per kilowatt hour 
which means that the efficiency of this industry is less than 9 per 
cent and the preventable thermal losses alone are not less than 30 
per cent. This means that the central stations of our public utilities 
waste $200,000 every day or nearly $75,000,000 a year over a modest 
actual standard of plants operated according to the principles advo- 
cated by us. 



CHAPTER X 

The Analysis of Expenses 

ALL expenditures incurred in the manufacture of power are in 
the final analysis expenditures of human energy, both mental 
and muscular, exerted in the past, present, or to be exerted in the 
future. Natural resources, sucha's fuel, metals, and other materials 
while accumulated in the course of time by the nature are secured, 
worked out and applied through the human efforts. If the supply of 
fuel is exhausted the same should be substituted in some other way 
by the exercise of human efforts. Real estate, buildings, machinery, 
materials — everything entering or contributing to power production 
— is the creation of man and has value inasmuch as human life and 
energy worked into these things have themselves value. While 
the value of human life may be accepted as absolute and not subject 
to any graduation of individuals, the value of human efforts is rela- 
tive and is commensurate with the service rendered. Rewarding 
according to service rendered appears to be the fundamental prin- 
ciple upon which our economic and industrial relations should be 
established and the discovery of a satisfactory method of measuring 
the value of service becomes our important problem. 

The fetishism of money power is vanishing as rapidly as a clear 
conception is gained that it is the labor-power that produces all com- 
modities and creates wealth. All the natural resources of a country 
are void of any value until the labor is applied to the resources and 
these are put to a definite use. Every commodity gets its value ap- 
proximately in proportion with the time rate of labor-power expended 
for its production. In so far as money is a convenient equivalent 
of labor-power, the expenditure of money is commensurate with the 
expenditure of labor-power, and therefore excessive cost of produc- 
tion spells inefficiently applied labor. In other words, high cost of 
production is a result of waste. Waste of materials means waste of 
time and labor spent for mining, preparation and delivery of them 
even though it is reckoned in terms of money paid for misused 
materials. Similarly, use of a larger plant or machine than the 
output demands, represents the waste of labor-power originally 
required for its construction, etc., though such form of waste appears 

327 



328 

to many as innocent as a sleeping babe. In this sense the over- 
expenditure of money is just as vicious a social crime as an arson, 
sabotage, lockout, or any other willful restriction of production — it 
destroys the productive efforts applied at one time or another or at 
least diverts or limits its application to some useless purpose. The 
old fallacy that one can spend his money as he pleases, does not 
hold any longer, since the money spent to no purpose means waste 
of natural resources and of social labor; similarly, the idle money 
means restricted production and limited satisfaction of wants and 
needs.* 

Dwelling on this subject, Abraham Lincoln in 1847 wrote: 
"Upon this subject the habits of our whole species fall into three 
great classes — useful labor, useless labor and idleness. Of these, 
the first only is meritorious, and to it all the products of labor right- 
fully belong ; but the two latter, while they exist, are heavy pensioners 
upon the first, robbing it of a large portion of its just rights. The 
only remedy for this is to drive, so far as possible, useless labor and 
idleness out of existence." 

This viewpoint, unfortunately, is very often overlooked by those 
whose business it is to control the expenditures, and the common 
fallacy of the financiers at the beginning of this century was that 
the expenditures necessary for production were not separated from 
the useless expenditures of mismanagement and from idleness of 
the available means of production. 

The task of mastering power production appears in this light 
as one aiming to drive out of existence (1) all useless labor, that 
is, labor either causing waste or applied to securing results that are 
ultimately rendered useless, and (2) idleness of men, machines 
and other means of production by setting both to some useful 
work. So long as we tolerate these conditions, the total amount 
of service rendered is far short of that possible, and the reward for 
service thus shared with waste and idleness is either insufficient 
or, if its share is made adequate, the burden imposed by these 
"heavy pensioners" becomes unbearable for the community receiv- 
ing only limited service. 

The fact that matter is neither created nor annihilated and that 
the energy merely changes its form in the universe may be of practi- 
cal help to us only upon our attaining immortality. As long however 
as the years of our life are numbered, the water running over the 

* Old saying "time is money" is not clear — the truth of this concept is better 
expressed by saying "money is time," i. e., money is a measure of time consumed 
in production of values. High cost indicates excessive time spent. 

W. N. P. 



329 

dam and coal sending its heat up the chimney does concern us most 
vitally, as expenditures of such a nature cannot yield any return 
until this escaped energy may be worked up into a useable commodity. 
The analysis of expenses incurred in power production thus falls 
logically into dual inquiry: 

1 Whether any use is made of the expenditure 

2 Whether the results attained are commensurate with the 

expenditure. 

Expenses and Cost 

While it has been customary to appoint guardians for incompe- 
tent, minors and idiots and receiverships for business failing to meet 
their financial obligations, we were hitherto slow to realize the neces- 
sity of social control over undertakings producing dear commodities. 
It is obvious that a plant generating electricity which consumes twice 
the necessary amount of fuel has its bus-bar cost higher than it 
would have if properly managed; that the plant employing two 
twelve-hour shifts cannot secure the same economy as the one 
working three eight-hour shifts; and that the plant operating on 
full load only for short intervals consumes more steam and fuel 
and carries higher overhead charges per unit of output than one 
operated continually at a favorable load. Yet we insist that public 
service commissions should not interfere as long as the public gets 
satisfactory service at "reasonable" rates. This fatal misconception 
of what constitutes the cost of a commodity is primarily due to the 
above mentioned confusion of necessary and unnecessary expenses. 
As soon as a clear conception is gained as to what expenditures are 
actually necessary for an efficient production a distinction between 
the cost of production and expenses may be gained. 

Let us take, for example a 50,000 kilowatt plant valued at 
$5,000,000 with actual output of 200,000,000 kilowatt hours per 
year, consuming 3.5 pounds of coal per kilowatt hour and reporting 
its expenses as follows: 

Fuel $1,050,000 

Payroll 56,000 

Supplies 6,000 

Maintenance 72,000 

Fixed charges 500,000 

Administrative expenses 175,000 

Total $1,859,000 



330 

This plant is capable of safely producing 350,000,000 kilowatt 
hours per year using two pounds of the same coal per kilowatt 
hour, thus the output of the plant is only 57 per cent of its capacity. 
Yet its actual coal consumption would be sufficient to generate the 
full output. Its payroll, fixed charges, and administrative expenses 
will remain the same whether the ouput is 200 or 350 million kilowatt 
hours. In such a case the comparison of unit cost (in cents) per 
kilowatt hour would appear thus : 





On Limited 


On Full 




Output 


Output 


Fuel 


0.525 


0.300 


Payroll 


0.028 


0.016 


Supplies 


0.003 


0.002 


Maintenance 


0.036 


0.021 


Total operation 


0.592 


0.339 


Fixed charges 


0.250 


0.143 


Administration 


0.088 


0.050 



Total production 0.930 0.532 

Inasmuch as 15 per cent net saving on the fuel is entirely possible 
in this case 0.078 cent is unnecessarily spent on the production of 
each kilowatt hour, and neither the consumer nor the country gets 
any advantage therefrom. Furthermore, the fact that $675,000 is 
a necessary money outlay for the entire plant does not mean that 
the limited output should bear this entire charge while the customers 
get the benefit of only four-sevenths of the plant. The necessary 
expenses thus accrued, from which the public does not derive any 
benefit, appear as follows: 

Waste of fuel 0.0078 

Excessive plant 0.107 

Pro rata of administration 0.038 

Total waste expense per kilowatt hour, cents 0.223 

The cost of each kilowatt hour, even for the 200,000,000 output, 
should be therefore but 0.930—0.223=0.707. In this case the ex- 
pense is about 30 per cent higher than what the true cost of 
the commodity should be. If this obvious method of reasoning 
were laid as a basis for costkeeping, and the rate making or price 



33i 

fixing recognizes the principle that the consumer cannot be charged 
for all the expenses incurred by the manufacturer and his financiers, 
the economic results would be beneficial for all concerned and far- 
reaching. 

From this standpoint, the manufacturers of power, or any other 
commodity, have to accept the expenses of waste and idleness on 
their own account instead of forcing the consumer to pay for in- 
efficiency of management or poor judgment or sometimes even future 
expectations from which no one but the investor himself expects 
the benefit. 

The advantages derived from our plan are shared by both in- 
vestors and consumers. An accurate knowledge of the excess of 
expenses over the necessary cost of production almost inevitably 
leads to the discovery of means for the elimination of this waste. 
Resulting possibility of reduced rates or selling price necessarily 
stimulates the demand for the commodity. Increased bulk of the 
output not only improves power factor, water-rate of turbines and 
all-around efficiency, but also absorbs the idle charges accumulating 
on the unutilized portion of the plant. Again, a larger output per 
unit of time means a more rapid turnover of the working capital and 
even a smaller rate of profit results in a larger amount of income 
per year. Increased bulk of net revenue in turn makes possible 
further betterment of plant and improvement of methods and, if 
the new demand due to reduced price of service is not yet satisfied, 
further enlargement of the plant capacity is possible. 

The economists of Marxian school forecasted the abolition of 
private ownership of the means of production, among other reasons 
on the ground that the rate of profit falls as rapidly as automatic 
processes reduce the profit-yielding portion of the capital used to 
hire labor, were apparently supported in their premises by the entire 
economic trend of the past. This eventuality would have been real- 
ized before, were it not for the unprecedented increase of productivity 
with the limit of satisfied demand still beyond our horizon. Periodic 
business depressions, of course, . signify merely a reduced purchasing 
power of society and in no way indicate that all individual wants 
and needs are fully satisfied or that no socially necessary production 
may further be expanded. 

The significant feature of the old economic regime was the prac- 
tice of producing commodities not at a cost, but at any cost and 
adding a profit on top of whatever expenses were incurred in pro- 
duction. At the same time the tendency of determining wages, 
that is, the purchasing power of the great majority of the consuming 



332 

population, was to keep them at the lowest level of the mere neces- 
sities of existence. It is obvious at the same time that only the in- 
crease of efficiency of productive processes is capable of ultimately 
reducing the price of a commodity and increasing the earning power 
of the employees. 115 

Any analysis of expenses would fail in its object if it does not 
thus differentiate the expenses as : 

1 Productive expenses 

2 Non-productive expenses 

3 Idleness expenses. 

Consequently the function of cost keeping cannot be properly car- 
ried out unless means are provided for such an analysis of expenses, 
that would clearly show what part of the expenses constitutes the 
cost of the commodity and what part of the expenses does not con- 
tribute anything to the value of the commodity, or to the value of 
the service rendered to the community. 

While the truth and value of this conception has been accepted 
by leading engineers for some time past and elucidating testimonies 
have been made on the subject to the Federal Trade Commission, 118 
the foremost accountants are gradually commencing to advocate this 
principle and to apply the same in their work. G. Carter Harrison, 
in his Cost Accounting to Aid Production 11T says : 

"The far reaching consequences resulting from what Mr. Polakov 
calls 'this fatal misconception of what constitutes the cost of a com- 
modity' are ably described ... in that writer's article on 'Master- 
ing Power Production' (Industrial Management, October, 1918, p. 
321). It is beginning to be realized that the wasteful and inefficient 
manufacturer is not his own enemy solely, but that of his employees 
and of the community at large. In the long run the ultimate con- 
sumer pays for all material and human labor and is to this extent 
contributing to the high cost of living, and hastening the day of 
the exhaustion of natural resources. 

"The obvious solution of the problem is, first, the determination 
of the necessary or standard cost of manufacture and, second, the 
separation of expenditures between those which are necessary and 
those which are the result of inefficiencies. As Mr. Polakov states : 
'An accurate knowledge of the excess of expenses over the necessary 
cost of production leads almost inevitably to the discovery of a 
means for eliminating this waste.' " 

It should not be inferred therefrom that an accountant, however 
able, can eliminate waste. It is decidedly an engineering problem but 



333 

an accountant can and should call attention to a loss. Neither can 
he do so unless an engineer, thoroughly farriliar with the process, 
problems and probable location of waste, provides him with a suit- 
able expense analysis plan or form. 

Relation of Production and Cost 

Progressive manufacturers, following the lead of Carnegie and 
Ford are trying to reduce manufacturing costs by means of in- 
creased production. Obviously enough, there are two ways of in- 
creasing the output of a plant. The one commonly recognized is 
through the increase of productivity of individual machines and 
men ; the second, as yet not broadly accepted, is through pressing into 
work all the equipment at all times. "Mr. Carnegie realized that if 
he did not run his plants at all he would lose a large sum of money 
each year, and that he would be far better off to lose that money run- 
ning his plant than to lose it if his plants were idle. His competitors 
preferred to close down their plants, with the result that they not 
only lost the money due to their idleness, but were not ready to take 
advantage of new business when it came." 118 Mr. Ford, likewise, 
concentrated his attention on the development of his plant manage- 
ment system on the basis that the productive capacity is constantly 
utilized. 

Whether the work of these pioneers was prompted by proper 
light thrown on their expense analysis or whether they found a 
stimulus in the desire to control the market by offering goods at a 
lower price than their competitors knew how to do, is immaterial. 
The important lesson is that the lack of satisfactory cost system is 
one of the most serious handicaps in developing a sound industrial 
policy. 

If the demand for the output is fairly constant from day to day 
throughout the year the ordinary cost accounting will show a fairly 
uniform unit cost of product. Its fluctuations will be due chiefly 
to a variation in the prices of materials and labor and to the methods 
of management in general. It will not however be able to give any 
idea as to how much more expensive is the product because the 
average output is below the full possible output. But if the fluctua- 
tions in the demand are considerable throughout the year or even 
within twenty-four hours, the conventional method of cost finding 
will be very seriously misleading, for the fixed portion of expenses 
will be at the times of large output spread over a large number of 
units, while at times when the demand is low it will make the cost 
appear much larger than if plant were utilized more fully. 



334 

These considerations are particularly important in application to 
power production, as most of the power plants, except those serving 
a large variety of customers with greatly diversified factors, have a 
seriously fluctuating output. In order to meet this rudimentary 
requirement of intelligent cost analysis, we must gain a clear con- 
ception how these fluctuations of output affect the expenses in- 
volved. 

Assuming for the sake of simplicity, first a single-unit plant. 
Its operation involves four main groups of expenses: 

Administration a 

Labor / 

Materials m 

Fixed charges c 

Total e 

Administration expenses, labor, and fixed charges remain con- 
stant whether the output is large or small and the unit cost therefore 
appears as a ratio of each : 

ale - a / c 
-; — : -ana — : — : — 
p p p pi pi pi 

where p is the number of units produced and p 1 either larger or 
smaller. The use of materials, however, varies at once in double 
relation: to efficiency at various loads and to total consumption. 
Therefore if m/p is the unit cost of materials consumed in genera- 
tion of say one kilowatt hour of electric energy, with a change of p 
the magnitude of this ratio will change not only in relation to output 
but the value of m itself will change — first, in relation to the effi- 
ciency of boilers, stokers, and turbines corresponding to their rate 
of driving, and second, as product of this efficiency and total quan- 
tity. With product p 1 the ratio m/p 1 will be not m/p 1 but m 1 /p 1 . 
Thus, for example the cost of fuel per kilowatt hour based on $4 
per ton of coal of 13,000 B. t. u. per pound in a plant consisting of 
one boiler and one turbo-generator varied with load as follows: 



Kilowatt 

Output 

per 

Hour 


Boiler 


Cost 
per 1000 


Turbine 


Cost of 
Coal per 


Total Cost 
of Coal 


Efficiency, 


Pounds 


rate 


Kilowatt 


for Output, 


Per Cent 


Steam, 
Cents 


Pounds 


Hour, 

Cents 


P, 

Dollars 


250 


60 


24.8 


37 


0.9176 


2.29 


1000 


74 


20.0 


19 


0.3800 


3.80 


2500 


72 


20.7 


15 


0.3105 


7.76 



335 

Assuming now a plant consisting of two or more units and the 
effect of the rate of production on expenses is beginning to be 
somewhat more complicated. So long as any unit remains idle it 
does not produce any power and to distribute the fixed charges 
of the entire plant over a partial output would mean a misrepre- 
sentation of true cost. Similarly administrative expenses do not 
change whether all units are working or not; the payroll gen- 
erally remains constant although in some cases extra help is 
needed to carry the increased output. As regards the variable ex- 
pense for materials (coal, water, etc.), while it varies substantially 
as illustrated in our first assumed case of single unit, the relation 
is more complicated both on account of distributing the load among 
units of the same characteristic, or probably among very dissimilar 
units as to their thermal efficiency and operating economy. For 
instance in a 5000 kilowatt plant the load of 3000 kilowatts may be 
shared between two 2500 kilowatt units as follows; 





Case A 


Case B 


Unit 
No. 


Load 
Kwh. 


Water-rate 
Lbs./Kwh. 


Total Steam, 
Pounds 


Load 
Kwh. 


Rate of 

Water 

Lbs./Kwh. 


Total 

Steam, 

Pounds 


1 
2 


2500 < 
500 


15 
23 


37,500 
11,500 


1500 
1500 


17 
17 


25,500 
25,500 


Total 


3000 


16.33 (aver.) 


49,000 


3000 


17 (aver.) 


51,000 



Case B is obviously less economical, involving, due to characteristic 
of equipment, an unnecessary expenditure of a ton of coal every ten 
hours. 

To give another illustration of the dependence of unnecessary ex- 
penses and losses from the rate of production, let us remember that 
when the power is generated it must often also be transformed prior to 
its distribution. Inasmuch as the efficiency of transformers ordinarily 
decreases rapidly at light loads below 50 per cent, due mostly to the 
core loss, it is very important to emphasize the economic importance 
of switching apparatus. A failure to at least disconnect large trans- 
former installation from the line during idle hours when it is not pos- 
sible to cut off the service at the station on account of power demands 
at other places on the line, would unnecessarily increase expense. 



33^ 

An illustrative example given by Mr. G. Roux, in the General 
Electric Review, for October, 1916, may be summarized as follows : 
comparing full-load operation during 24 hours with full-load during 
4.8 hours and very small load during the remaining 19.2 hours, we 
obtain the following table: 





Full Load 


Fractional Load 


Output, kilowatts 


4800 

5347.16 
89.76 
10.24 


4800 


Input, kilowatts 


5666.19 


Efficiency, per cent 


84.71 


Losses, per cent 


15.29 



Three questions arise in this connection: who shall bear the 
burden of the losses ; how to account for them ; and how to avoid 
them. If the same output be distributed during the 24 hours, only 
one-fifth of the transformer capacity would suffice and, if such 
transformers were provided, they would not only greatly lessen the 
fixed charges on larger installation, but the losses would be reduced 
from 10.24 per cent to 5.03 per cent. In this case 319 kilowatt 
hours are lost daily, representing annually an unnecessary expense 
of not less than $600. 

Again, if the capacity of a line is increased by the installation of 
a second line, that is, by nearly doubling the investment, instead of 
the installation of synchronous condensers to improve the voltage 
regulation at the receiver end (which as a rule, is a smaller invest- 
ment) the question arises as to the proper charge for both losses 
on needless investment and losses due to wattless current, etc. 

Such relations between the cost of service and the rate of pro- 
duction brings us face to face with another problem, the solution 
of which the cost accountant must submit to an engineer — namely 
to determine what is the necessary expense and what is the un- 
necessary. 

In order to illustrate the fallacy of the tradition that the unit 
cost of producing power decreases in the same proportion as the 
kilowatt-hour output increases, we shall analyze here, very briefly, 
the variation of the unit cost of production for a 10 units 32,000 kilo- 
watt-ampere power plant, assuming that a reasonable flexibility of 
the steam generating equipment exists, and that the efficiency of 
the management remains the same. Table 1, Figure 109, gives for 
this plant (for a range of output from 30 to 100 per cent of normal 



337 

rating) the variation in the unit and the total cost of the principal 
elements in production, as well as the unit and total cost of the 
entire production. 

Representing the attached tabulated values graphically (see 
Figure 110), it will be noted that the total cost of production has 
been split into three main components, namely, (1) coal, (2) 
operating labor, and (3) maintenance labor and material and operat- 
ing supplies except coal. It was observed within the range taken 
that the coal varied directly as to the output; that the operating 



TABLE I— 


-VARIATION 


IN COST OF PRODUCTION 








c 
Coal 


■S Oper. 


Maintenance 


Total 


%of 
Normal 




Labor 


and Supplies 


Production 


Output 


























Plant 


in 


















Rating 


K. W. H. 


Total 


Unit 


Total 


Unit 


Total 


Unit 


Total 


Unit 




Cost, 


Cost, 


Cost, 


Cost, 


Cost, 


Cost, 


Cost, 


Cost, 






Dollars 


Cents 


Dollars 


Cents 


Dollars 


Cents 


Dollars 


Cents 


30 


856,000 


3,070 


.3575 


1,400 


.1640 


806 


.0940 


5,276 


.615' 


40 


1,145,000 


4,090 


.3575 


1,400 


.1220 


1,008 


.0880 


6,498 


.573 


50 


1,430,000 


5,110 


.3575 


1,400 


.0978 


1,174 


.0812 


7,684 


.537 


60 


1,715,000 


6,130 


.3570 


1,400 


.0816 


1,320 


.0769 


8,850 


.516 


70 


2,000,000 


7,150 


.3575 


1,400 


.0700 


1,450 


.0725 


10,000 


.500 j 


80 


2,285,000 


8,160 


.3575 


1,400 


.0613 


1,560 


.0683 


11,120 


.486 


90 


2,570,000 


9,180 


.3575 


1,400 


.0545 


1,660 


.0646 


12,240 


.476.1 


100 


2,860,000 


10,200 


.3575 


1,400 


.0488 


1,762 


.0616 


13,362 


.466 ; 



Fig. 109 

labor was constant and independent of the output ; and that the main- 
tenance expenses varied about one-half as fast as the output. The 
resultant curve showing the total unit cost of production indicates 
that for an increase in output of 234 per cent, the decrease in unit 
cost was only 24 per cent. 

Inasmuch as the output of this plant for the year 1914 was 35 
per cent greater than for the year 1913, the unit cost should have 
decreased 6.6 per cent, while as a matter of fact it actually decreased 
15 per cent. Evidently this decrease was due to causes other than in- 
crease in output. Since there have been no physical improvements 
of any kind made at the plant during this time, the additional de- 
crease over that which was to be expected is due purely to the human 
element, that is, to the improved methods of management. 



338 



Relation Between Efficiency and Cost 

The relation between the efficiency and the cost must be estab- 
lished and understood before any attempt is made to control the 
production. Generally speaking the higher the thermal efficiency 
of a plant, the higher is the operating economy. This however may 
not always be true; while the same plant with other conditions 
remaining constant may secure a higher efficiency of some partial 
process the expenditures involved may exceed the advantages de- 
rived from the increased efficiency; again it may be found that a 
sacrifice of thermal efficiency may yield larger financial returns if 
a quicker turnover of the capital is thus secured. To illustrate: 
improvement of vacuum from 28 to 30 inches will require additional 
steam consumption by auxiliaries, an extra amount of water, and 
probably increased overhead charges on the improved equipment, 
all of which taken together would cost more than the value of steam. 
If the furnace efficiency is 75 per cent, say at 100 per cent rating, 
while at 150 per cent it may drop a few per cent, it may be found that 
the cost of the additional coal wasted is either smaller, equal or larger 
than the saving on rent, depreciation, interest, and payroll of the 
boiler plant which is to be enlarged 50 per cent, instead of carrying 
50 per cent overload on existing equipment. In other words, the 
apparent advantages of low thermal efficiency are not real and are 
due only to our financial system which derives its benefit not 
from service to society but from destruction of natural re- 
sources as well. The same paradox is evident in the case of 
economy on wages. While the lower rates paid to employees 
or the longer hours they are compelled to work, reduces the total 
payroll and apparently increases the economy, they undermine 
eventually not only the prosperity of the nation by creating dissatis- 
faction, increasing the death rate, lowering the health standard, 
reducing the buying ability of the country, retarding the intellectual 
development, etc., but even affect immediately the concern practicing 
such form of economy. A low rate of wages attracts none but the 
poorest grade of help, long hours rapidly depreciate the physical and 
mental value of workers and the quick and inevitable result is low 
operating efficiency where increased cost of fuels offsets the savings 
on payroll, as well as greater liability for serious hazards. 

In this case again the entire country pays with its man resources 
and its natural resources sacrificed for the sake of immediate con- 
centration of gold in the hands of those practicing such methods. 
We thus arrive at the double conception of economy; individualistic 



339 



and social. While the individualistic conception of economy in pro- 
duction admits waste and losses as revenue producing means and 
thus introduces a conflict between economy and efficiency, the econ- 



0.7 



0.6 



0.5 



o 

u 






0.4 




0.3 



0.2 



0.1 



OPERATING 
LABOR 



COAL 



10 20 30 40 50 60 70 
PerCenf of Plant Output 



60 90 



100 



Fig. i io. — Variation in Total Cost of Production with Variable 

Plant Output 

Assuming that the thermal efficiency will be maintained at a uniform level, 
carrying any load from 30 to 100% of plant capacity, we see that with nearly 
trebled output the unit cost will be reduced only by one-quarter. 

omy in its broad, national aspect explodes the paradox that it is 
profitable to waste labor and material since economy in the broad 
sense of the word is identical with the most efficient utilization of 
man power and resources. 

As long as public service commissions aim to serve the interests 



340 

of the people they should not attempt to regulate the rates and the 
service rendered by the utility companies without examining the 
methods of power production and their effect on the cost. More- 
over, inquiry into "reasonableness" of rates cannot be intelligently 
made unless a clear distinction is drawn between necessary and un- 
necessary expenses. Most of the prescribed methods of cost-keep- 
ing and accounting do not offer any opportunity for such important 
differentiation, but even if they did provide for segregation of ex- 
penses from which the public does not derive any benefit, the rest 
of expenses, ostensibly applied for production, transformation, dis- 
tribution and sale of power may and actually do include a certain 
proportion of waste. To determine the extent of this waste of 
public money (paid for destroyed natural resources and wasted 
labor) and accurate measure it is necessary. It should be the task of 
public service commissions to determine for each utility plant and 
each district a schedule of standard costs based on the best engineer- 
ing and managerial practice known and adjustable for any demand, 
output, price of labor and materials, etc., and to apply this measure 
to monthly analysis of cost reports submitted by utility companies. 
Until public service commissions are ready to render this service to 
the community which supports them, they are not fulfilling their 
duty, since their rulings are not necessarily based on indisputable 
facts, but largely rely upon the presentation of the case by conflicting 
parties. 

Predetermination of Costs 

At a meeting of The American Society of Mechanical Engineers 
in 1916, the author presented a paper on Standardization of Power- 
Plant Costs, since broadly quoted 119 but largely misunderstood. The 
aim was to present a method by which it may be possible to judge 
how close the actual performance of the plant is to the possible 
minimum cost at any time and under any circumstnaces, all variable 
factors beyond operating control being automatically adjusted. This 
possible minimum cost serves as a measure of economic perfection 
of operation. Obviously the physical, local, etc., dissimilarities of 
plants would not permit the adoption of a uniform scale applicable 
to each and every plant but for any particular plant, taking into 
account all its specific peculiarities it is feasible with comparative 
ease, to determine the individual standard of economic operation, 
which may be termed standard cost. 

The cost of manufacturing power, or any other commodity, being 
the result of numerous factors involved in production, is in the 



34i 

end the chief criterion upon which the market price, range of use, 
legislation, future developments, social welfare, etc., depend. Few 
if any of these questions can be intelligently answered from a knowl- 
edge of the actual expenses owing to the effect of an unknown factor 
— the degree of perfection of the actual performance. The impor- 
tance of an accurate knowledge of the meaning and significance of 
actual cost data to the financier warrants the development of a method 
whereby a cost report tells: 

1 What the power, costs 

2 What it should cost 

3 Where the loss has occurred 

4 Why the loss has occurred. 

These questions answered, elimination of waste is a comparatively 
simple engineering problem. 

Standardization and predetermination of the cost of power pro- 
duction have never before been considered as possible undertakings, 
and their advantages were thought questionable. Predetermination 
of operating costs has not been made use for other than estimates 
of probable future expenses prepared by promoters or contractors. 
These estimates are usually based, as is always the case in work 
of such a nature, either on past performances modified by expecta- 
tions, or on data obtained from the actual performance of another 
plant considered as similar. The accuracy of such estimates depends 
at least on the following conditions : 

1 How reliable were the cost records used 

2 How near the possibilities were realized 

3 How close is the similarity of the equipment of the plants 

under consideration 

4 What effect has the location 

5 What effect has the nature of load 

6 What effect does the labor condition produce 

7 How completely were the future factors foreseen. 

However, since there is no assurance that in the sample plant the 
operating methods are perfect, it is not reasonable to expect that 
another plant is in every respect identical to the sample plant, and 
the value of such a guess of operating cost is highly problematical. 
On the other hand, realizing that such estimates are inevitably 



342 

colored by the personal sympathies and prejudices of the estimator, 
a demand for a class of disinterested counsellors has been created. 
As the financial and not the thermodynamic side of the question is 
more vital to the investors, the predetermination of the results of 
power production is often entrusted to public accountants who may 
or may not be fully equipped to account thoroughly for the influence 
of such factors as the chemical and the physical properties of avail- 
able fuels on the efficiency of boilers and furnaces, the effect of load 
and machine factors, water rate of turbines under the predominating 
condition of load, role of power factor, wattless current, phenomena 
of electric transformation, transmission, drop of voltage in distribut- 
ing lines, and numberless other factors affecting the cost of current 
either directly or indirectly. 

The urgent need of a dependable measure for the financial effi- 
ciency of operation has prompted managers and owners to compare 
their operating-cost data with those available from other plants. An 
attempt to decide whether one's operation is as economical as possible 
by comparing it with operating data from other plants whose equip- 
ment and service are more or less radically different, would be absurd 
were it not for the want of a better method. Table 2, Figure 118, 
presents an example of such an effort to make use of cost data by 
comparing the monthly cost reports of seven central stations. Their 
equipments are widely different ; no two of them use the same grade 
of coal ; the arrangement of machinery requires in some cases double 
the number of attendants: one is generating electric current for a 
trunk railroad, whereas others supply suburban and tunnel traffic or 
even private consumers, with consequent differences in the character- 
istics of current, distribution of load and peaks during the day, etc. 
Under such circumstances, to say from those data that one is operat- 
ing more efficiently than another is, at least, too presumptuous. 

The most interesting attempt to devise means for more rational 
cost studies was offered by Messrs. H. G. Stott and W. S. Gorsuch 
(Transactions, American Institute of Electrical Engineers, 1913). 
The use however of various factors tending to compensate for 
differences in fuel, load factor, labor cost, etc., is evidently inade- 
quate. Prices per heat unit in the fuel, if adjusted, do not dis- 
tinguish the differences in cost between the inherent efficiency of 
the boilers, furnaces, and stokers and the methods of firing or the 
personal element of attendance. The effect of load-factor correc- 
tions is entirely offset by existing differences in the water rates of 
the turbines and the influences of the auxiliary apparatus in the 
plants under comparison. Establishing payroll correction factors 



343 

on the basis of mere pay rates is erroneous, because of the size of 
units, floor plans, automatization of certain operations, etc., requiring 
more or less men, not to mention the fact that generally low pay to 
attendants results in high cost per kilowatt-hour, usually on the coal 
item and often in maintenance. Even if these factors of correction 
were unquestionably correct, this method leaves the effect of the 
supremacy of the equipment efficiency unseparated from the efficiency 
of the methods of management. Finally, even if all factors are 
fully accounted for, the fact that one plant is as economical as 
another does not tell how far each of them is from its possible 
degree of perfection. 

Expenses that are independent of the volume of output are at the 
same time independent of each^ other and do not characterize the 
efficiency of processes performed in the power plant. Their effect 
on the unit cost is represented by a parabolic curve decreasing with 
the increase of output. They are exemplified by interest on invest- 
ment, depreciation, sinking fund, insurance, management, payroll 
(in some cases), taxes, etc. 

Expenses that vary with the output of the plant characterize the 
efficiency of operation, other conditions being constant, and their 
elements stand together in dependent sequence. If represented 
graphically, they show very irregularly shaped curves peculiar to 
each set of equipment. The unit has a general tendency to drop 
with increase of output, as the efficiencies of boilers, turbines, etc., 
tend to improve with increased load; yet, since with higher degrees 
of overload the efficiency decreases, the unit cost rises. With further 
increase of load, when an additional unit is started, the efficiency at 
first drops, then again begins to improve until their cumulative effi- 
cient capacity is exceeded, when the unit cost commences to again in- 
crease. Such waves are sometimes very pronounced, and generally, 
throughout the range of the plant's capacity, the number of waves on 
the unit-cost curves is equal to the number of generating units in- 
stalled. Fuel, water, certain supplies, and, in less pronounced de- 
pendence, maintenance expenses, belong to this group of expenses, 
and to classify the expense account it is best to itemize them to 
correspond with the steps in which the energy is transformed during 
the generating process. 

The criterion of economy is established by the interplay of three 
factors, time, product, and cost. When only one factor varies, its 
effect on the economy can easily be foreseen. Thus a greater product, 
without a change of the time required or the cost, increases the 
economy. An increase of either the time of production or the cost 



344 

of production reduces the economy. Generally, however, all the 
factors vary simultaneously, in which case an analysis of the equa- 

P 
tion for the economy criterion 6~— can be made for any influ- 

ential element «, and the increase of economy for a unit increase 

of n, if differentiated, is — =-rrH — ?^+rr> a ll elements being essen- 
ce r C t 

tially positive. 

Such a general study can be made with respect to economy if 
more than one influential element is involved by means of simul- 
taneous equations for each. The graphic method offers, however, 
an easier means of solving the problem. To determine the economic 
limit reached by a continuous increase or decrease of the influential 
elements is not an easy problem, but unless it is solved we are in the 
dark not only as to what economy can be obtained, but also what 
changes in conditions and methods are essential to attain the desired 
degree of economy. The analysis of the effect of the variations of 
these elements, involved in determining the maximum limit of econ- 
omy and corresponding standard cost, can be compared to a determina- 
tion of the height of the apex of a hill by taking altitude readings 
on both slopes in one direction and then repeating observations in 
the crosswise direction. 

It is relatively unimportant whether the maximum limit of econ- 
omy is determined empirically by rigorous observations, tests and 
analysis of all influential elements, or calculated from the principal 
data already available. It is however imperative that such a study 
be made and the economy limit established, as this is the only criterion 
for judging the actual performance. Carrying out the analysis of 
the economy limit to its logical conclusion, the standard cost of the 
product is arrived at, and evidently during this investigation not 
only are the itemized costs of the individual partial processes found, 
but the conditions and methods whereby the standard cost can be 
attained are established. In other words, unless the standard costs 
are established an accountant has no measure of the existing losses. 

Manifestly, in the course of determining the standard operating 
costs, such factors as the inherent efficiency of the equipment, its 
efficiency under different loads, the prices of fuel and supplies, the 
necessary and sufficient number of attendants and their compensation, 
etc., are already taken into consideration for a given plant. Any 
deviation occurring between the actual operating cost and this stand- 
ard cost indicates that some of the necessary conditions were 
not lived up to, and, if standardization has been carried out in 



345 

sufficient detail, it leads directly to the allocation of the loss to 
operating methods. On the other hand, any change in the basic 
data used in determining the standard cost being known, an adjust- 
ment of the standard cost can easily be made before the blame is 
put at the door of the operators. The efficiency of the thermo- 



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Kilowatt -hours per Day . 

Fig. hi. — Curves of Standard Operating Cost for Hydro-Electric 

Plant 

Per cent of labor and supervision chargeable to hydro-electric operation is the 
same as the per cent of its output to total station output. Carbo-electric standard 
cost is shown in Fig. 113. 

dynamic process so largely determines the operating cost in a power 
plant, that it should be made a subject of a most thorough investiga- 
tion to ascertain first the maximum efficiency limit of each partial 
process, and then the result of their interplay. When this is accom- 
plished, the entire process should then be studied for the purpose 
of standardizing the methods and adjusting for such a balance of 
the efficiencies of the partial processes as will secure the maximum 



346 

profit or economy for the time, energy and materials expended. 
In this it is sometimes found that the most economical thermal 
efficiency is somewhat below the maximum obtainable, as the slight 
additional gain in efficiency necessary to reach the maximum is not 
warranted by the expenditure required to attain it. When these 
limiting conditions are determined, a method can be defined for each 
member of the working force, prescribing his duties and the con- 
ditions he must maintain to secure the most profitable degree of 
efficiency. Upon the conclusion of these studies, the best efficiency 
of each unit and their combination being known for any load, the 
standard cost for any output in a given time can be conveniently 
represented in graphical form. 

The principles of determining the standard cost of maintenance 
and upkeep of the plant and equipment are substantially the same; 
the method of study, however, is somewhat different. It involves 
a study of the design and construction of all the elements of the 
equipment; and minute records of their service and cost of main- 
tenance which may lead to a modification of design, use of cheaper 
renewable parts, etc. Next, the standardization of supplies, begin- 
ning in the laboratory and followed by actual service tests, helps to 
determine not the lowest purchase price but the lowest service cost. 
Finally, time studies embracing schedules for inspection, routes for 
maintenance men, standardization of tools, motions, methods, etc., 
conclude the investigation. The criterion is, of course, not the wages 
of the employees, but freedom from accidents, breakdowns and the 
lowest attainable cost of upkeep per unit of the plants output. It is 
evident that there may not be any theoretically certain standard cost 
of maintenance, but an empirical standard thus developed is generally 
but a fraction of the best actual records of the past. 

Upon concluding this double analysis of the maximum economy 
obtainable, the graphs of the standard cost of the power production 
may be drawn. Curves may be conveniently arranged with the co- 

p 

ordinates of cost C and product per unit of time -- (output). It will 

then be noticed that the time element is one of the most influential 
factors in power economy. Whereas in some cases, where the num- 
ber of generating units is large, the coal rate per unit of output 
remains fairly constant and the other items of cost reduce rapidly 
with increased production per unit of time, in other cases the stan- 
dard cost of fuel also decreases as the time during which a certain 
output is produced is shortened. Figures 111 and 112 represent curves 
of standard operating costs. It is evident that any number of curves 



347 

may be plotted following the above method, each curve representing 
an itemized standard cost according to the adopted classification. 
Figure 113 is thus prepared for a medium-size public-utility central 
station. It shows the variations of the standard costs of coal, boiler- 
room labor, water, supplies, overhead charges, engineers and super- 
vision per kilowatt hour at various monthly outputs. The cost 
scale does not show, however, the actual standard. This plant com- 
prises four 600 horse power boilers and three turbo-generators, one 




I9Z 240 2&6 336 354- 43t 460 529 576 6E4 66t 
p 

^•'Production-Thousands of Kw-hr. per Day. 

Fig. ii2. — Standard Operating Cost Curves 
This diagram was prepared for the year 1914-1915 for a large Electric Railroad 
Central Station, representing fluctuations in the cost depending on the distribu- 
tion of load among generating units and general downward trend with increased 
production. The drop in the boiler room labor expenses below 190,000 Kwh. out- 
put per day, is due to idleness of the entire section of the Boiler House. 

of 2500 kilowatt-amperes and two of 500 kilowatt-amperes; it 
operates 24 hours per day, 7 days a week. 

From this diagram it appears that the cost of coal per kilowatt- 
hour is lowest when the output of the plant is approximately 1,900,000 
kilowatt hours per month. Further increase of output coincides 
with the increased cost for fuel required, due to the characteristic 
of boilers and turbines that they lose in their efficiency at higher 
rates of driving. Again, costs of labor, supplies, prorated over- 
head charges, etc., per kilowatt-hour, which drop more rapidly 
than the cost of fuel rises, offset the difference and render a greater 



348 

monthly output more desirable economically. Even there, however, 
we meet a limit when at the rate of 2,000,000 kilowatt hours per 
month the unit cost becomes higher than it was at the lower output 
of 1,900,000 kilowatt hours per month. 

Figure 112 illustrates a few characteristic curves of the standard 
cost kilowatt-hour for various rates of output of a large central 



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Ki lowatt Hours per Month 

Fig. 113. — Curves of Standard Operating Cost 

This diagram represents standard expenses of a carbo-electric portion of a 
plant of a public utility company; hydro-electric plant standard expenses are 
shown in Fig. in. Costs based on prices prevailing in 19 13. 

station feeding the lines of an electrified trunk railroad. The plural- 
ity of waves on the fuel-cost curves, etc., is due to the decrease 
of efficiency occurring every time an additional unit is cut in and 
until the load on all reaches a more favorable point. The tendency 
of the total standard cost curve to go steadily downward with the 
increase of the output rate is due to the water rate of generating 
units, higher boiler efficiency, reduced banking, etc., as well as to 
distribution of other expenses over a large output. 



349 




s-ie> 



u°a 



350 

The practical use of such predetermined standard costs can be 
made extremely simple by employing these graphs. For busy execu- 
tives or owners, the entire cost record visualized by graphical repre- 
sentations of the items of the account is found very convenient. An 
example of such a graph is seen in Figure 114, wherein the actual 
unit cost and the standard unit cost are plotted to the same scale, 
the deviation of one from the other suggesting at a glance the degree 
of perfection of the performance. The total-expense curve and the 
cumulative-expense curve may be shown on the same graph to a 
suitable scale; the latter curve is found very serviceable for com- 
paring these items with the appropriation made. A cost system 
kept on a card file in this manner will represent clearly in any de- 
sired detail for any period and at any time: 

1 How much was spent 

2 How much each unit of output cost 

3 How much it should have cost 

4 What the fluctuations of expenses and unit cost are 

5 What the fluctuations of efficiency are 

6 How close the actual amount spent in any time is to the 

appropriation. 

The accuracy of such graphic records is sufficient for most practical 
uses and refernces, as it allows the interpolation of unit costs to 
0.01 of a cent. If the exact total of expenditure is wanted, it can 
be had at any time from the book records, whereas the use of books 
and figures exclusively lacks the comprehensiveness and visual in- 
structive value of graphs. 

Any comparison of the production costs of various plants may 
now be made in a different light. By comparing the standard costs 
of one plant with those of another, one gains the knowledge of how 
much cheaper the power can be produced in one plant than in 
another, due to its various physical advantages, corrections for load 
and output all being automatic. Again, by noting how near the 
actual cost of one plant is to its standard cost, one has at once 
a measure of the quality of the methods and management. Thus, 
referring again to Figures 112 and 113 the actual cost per kilo- 
watt-hour of 35 cents in one plant means a worse operating economy 
than 48 cents in another plant under another load condition. Yet 
without such accurately predetermined standard costs that are indi- 
vidual for each plant and condition of load, correct comparison is 



35i 

impossible, and conclusions from a mere study of accountant's figures 
are apt to be grossly in error. 

Figure 111 reproduces a diagram of standard cost for a hydro- 
electric plant consisting of four 600 kilowatt generators. This equip- 
ment is located in a hall adjoining the turbine room of a plant 
whose standard costs are shown on diagram Figure 113; same 
crew attends to both steam and hydroelectric equipment; the 
payroll is prorated between the outputs of each. The cost of 



050" 



,0.45 



040 



0.35 



0.30 



0.25 



0.20 



0.15 



O.IO 



-I 1— 1 1 1 f— J 1 1 1 I | | | f 

77?,? Vertical Bars indicate the Standard Cost of 1000 Pounds of Steam , on 
''What the Product should Cost, considering Price of Coal , Labor and Supplies' 
and the Monthly Output at Best Practically Obtainable Efficiency. 

The Distance between actual Cost Curve and the Top of -the Bar is a 
Measure of Preventable Loss . 

If Actual Cost Curve crosses a Bar~ 




Fig. 114. — Graphic Comparison of Actual and Standard Unit Costs 



power is thus regarded as the result of methods used on one side 
and given physical conditions on the other. If the cost analysis 
succeeds in segregating these elements and measures each, the most 
valuable knowledge will be secured. If the prices of materials, 
supplies and labor are known, the efficiency and characteristic of 
equipment used are also known ; the nature of service, character of 
load and some local factors would influence the expenses in a manner 
not difficult to determine. In a given plant all these elements remain 
constant until a change is made by a new installation, new market 
prices or a new field of service, etc., all of which are readily notice- 



352 

able and accountable. Now if the costs still fluctuate, the difference 
between the actual cost and the predetermined is due to the variation 
of the methods of management of the plant. If these methods are 
studied, the best way selected, the men trained and the practice stan- 
dardized, and still the costs deviate from the predetermined standard 
(other conditions being constant or equated for) it means that the 
task is not lived up to ; that is, the management fails to manage. 

This method of studying costs offers therefore a measure of 
efficiency of the plant management. If the principles and methods 
selected and used are right, the results will necessarily be as ex- 
pected and the best known (standard) method finds its expression 
in the predetermined cost (standard). 

A cost system developed along these lines will not only afford 
a means for clearly understanding the operating and managerial prob- 
lems, but offer a basis for cost comparisons of different plants. 
The essentials of the knowledge gained through comparing actual 
with standard costs are: 

1 Relative supremacy of plants proper 

2 Relative advantages of managerial methods 

3 Relative extent of preventable losses 

4 Relative advantages of prices of materials, etc. 

These cannot be found unless there is a comparable basis or scale for 
comparison, which is offered by standard costs determined for each 
plant individually, as at least ten main variables must be accounted 
for as follows: 

1 Nature of load 

2 Character of service 

3 Conditions imposed by location 

4 Inherent efficiency of equipment 

5 Arrangement of equipment, floor plan, etc. 

6 Cost efficiency of fuel and supplies 

7 Legal requirements 

8 Methods of operation 

9 Labor conditions 

10 Methods of compensation for service. 

Each of these variables being in its turn a product of a plurality 
of factors, it is manifestly impossible to state, without the aid of 
carefully worked out standard costs, that the economy of one plant 
or another is satisfactory, or where and how it can be bettered. 



353 

Inasmuch as the standard cost cannot be determined without first 
finding out how the maximum economy can be secured, the process 
of standardizing costs invites a process of devising the best way for 
operating and managing. Once both methods and results are posi- 
tively established, costs are but a form of expressing the final re- 
sult. It is true that standard cost is influenced by the prices of 
commodities used in connection with the generation of power, as well 
as by some conditions beyond the control of the management and 
the operating engineers, but the adjustment of the standard costs to 
every change of these factors can be made as simple as the use 
of a slide rule. Furthermore, a separate account should be kept 
for such charges as are due to business policy, so that a division of 
responsibility between those ^managing the production and those 
directing the business could be drawn. 

So long as costs of producing power come as an unexpected sur- 
prise and arouse the curiosity to an extent of comparing them with 
the preceding month, year, or some other plant's data, the manage- 
ment of such power plants is evidently very haphazard, lacking an 
aim at any definite goal. Without predetermined standards, super- 
intendents and managers will continue to believe that they control 
the production, and owners will remain in happy ignorance as to how 
much of their money goes to waste and why. Only after the es- 
tablishment of standards and ideal costs of production by means of 
the most rigorous analysis will cost accounting be of help to the en- 
gineer, and only then can it be said that the generation of power is 
directed by the management and controlled by the engineers. 

Expenses of Idleness 

In the chapter on equipment, reference was made to the effect 
of time-rate of the use of equipment on the economy. Figures 28 
and 29 illustrated the increase of a non-productive portion of fixed 
charges with a decreased plant output. In the case cited this in- 
crease of unabsorbed expenses of ownership of excessive plant was 
$1,645 per week or about $85,500 per annum. The question we are 
facing now, in connection with our analysis of plant expenses is 
twofold: first, how to allocate these expenses, and second, whether 
these expenses constitute any part of the cost of the product. 

In the past the ready answer to both these questions was uni- 
formly that of summary dismissal of both, for the reason that the 
ultimate consumer was called upon to pay the entire expense of 
over-equipment. In cases of manufacturing plants these expenses, 



354 

as a portion of auxiliary expenses, were .prorated over the factory 
output while in cases of public utility plants a solution of the prob- 
lem has been sought in attempts to secure "off-peak load" tending 
to minimize the idleness of equipment. While this course is unques- 
tionably in the right direction, the methods were frequently at fault 
inasmuch as the failure to properly allocate the exepnse of idleness, 
pretty generally penalized the small consumers. 

The loss caused by over-equipment is primarily a social waste. 
Materials are consumed to produce machinery that remain inopera- 
tive; men spend their time building things which do not serve any 
useful purpose. Consequently capital representing these useless ex- 
penditures does not take any part in the creation of new commodi- 
ties nor does it play any part in rendering useful service. Never- 
theless the investors, ill-advised or ignorant on the point of cur- 
tailing the productive capacity of the country, continue to claim the 
return on their investments. The obvious way to secure this re- 
turn was to distribute the expenses of ownership of idle equipment 
over the limited product of working machines. This method in- 
creased the cost of the product without increasing the earning power 
of the population or, in other words, due to the practice of extracting 
return on non-productive investments the cost of living increases 
faster than the wages. 

In a poem published as far back as 1831 in the Poor Man's Guar- 
dian a few lines bear witness that this economic fallacy was recog- 
nized nearly a hundred years ago : 

"But if the price be made of rent, 
Titles, taxes, profits all 
Then we, who work to make the goods, 
Shall have just none at all." 

Yet a recognition of an evil does not bring any relief until its ex- 
tent is accurately measured and means are developed to ameliorate 
the condition. 

A few actual examples may be to the point. The cost of owner- 
ship of a mill power house is $3,000 per month and the normal 
monthly output of steam for power, heating and processes is 15,000,- 
000 pounds. The total production expense per 1000 pounds of 
steam (part in which is converted into various forms of power) is 
averaging 40 cents and the total cost per 1000 pounds converted steam 
is, including the cost of ownership, 60 cents. If figured out per 
unit of the mill product the cost of power would be, when running 
full, 5 cents. In fact the plant is twice as large as is needed to meet 



355 

the mill's demand and only 7,000,000 pounds of steam (converted) 
is consumed per month. In this case prorata of ownership cost per 
1000 pounds is 40 cents and the total cost of power and steam 80 
cents per 1000 pounds and the cost of power per actual unit of mill's 
output is 6.5 cents. 

In this manner the consuming public by buying the product of 
this mill, which has twice as large a power house as it needs, pays 
yearly about $18,000.00 for which it receives nothing in return. This 
example was picked out advisedly from our records as it is typical 
of a small plant a large number of which constitute our great 
industry. 

While the method of collecting and recording data of this nature 
was outlined in the preceding ^chapter, their application to analysis 
of costs and expenses entails a special procedure. Certain simple 
records are usually kept in a plant to enable accurate analysis of idle 
time and proper allocation of causes. Generally an intelligently com- 
posed power-log furnishes the necessary basis for the disbursement 
of the non-productive portion of power expenses. If the expenses 
are prorated on the hourly output or plant-section basis, the number 
of hours each unit was in operation, ready for operation or idle 
should be recorded and preferably graphically. As this method is 
somewhat complicated, it is warranted only in plants where a great 
variety of units of widely different types is used. Ordinarily only the 
following records are needed: 

1 Net output: kilowatt hours (or pounds of steam) 

2 Hours and number of boilers banked and generators phased 

for stand-by service 

3 Hours and number of water wheels idle (due to lack of 

water power or lack of load) 

Cost of idleness from the above data is summarized on a chart 
which combines graphical visualization with actual figures and 
analyzes the cause of idleness into classes. It may be also arranged 
to show daily fluctuations. By the division of a plant into three 
general groups: generating steam, generating electricity and trans- 
forming and feeding energy into lines, an extra usefulness is added 
for, besides measuring a loss and allocating at a glance its cause 
(which knowledge stimulates and helps to find means of a better 
utilization of equipment), it shows clearly whether any group of 
equipment is disproportionately large or which process (if any) acts 
as a damper on a more complete utilization of the rest of the equip- 



356 

ment. Such a chart may be blue-printed and distributed among all 
the officials whose co-operation is capable of wiping out the loss. 

To illustrate this procedure let us consider a mill power plant 
which carries the following fixed charges : 

Interest on investment $4,000 

Interest on coal and rent 500 

Taxes 1,950 

Insurance, fire 75 

Insurance, boiler 550 

Insurance, liability 125 

Insurance, fly wheel 70 

Depreciation 9,500 

Total per year $17,770 

Since this plant generates both steam for processes and electric power 

these charges are differentiated as follows : 

Annual Hourly 

On boiler house $9,665 $1.35 

On engine room 8,105 1.12 



$17,770 $2.47 

Inasmuch as the safe output of boilers with due reserve is 54,000 
pounds per hour the overhead charge per 1,000 pounds is 2.5 
cents whereas the charge per kilowatt hour is 0.112+0.09=0.202 
cent. 



Used j 
10 > I0 



20 



50 




'. ■••,■' .■ i" 

,352.50]//, 



i Per |Cent j 
40 50 60 



70 



&0 



90 



100 



77? • — 
\43Z3.Z0; 



1007c 



#423.00 



#352.20 



$270.00 



$345.20 



$160.00 



60 50 40 30 20 

NALYS1S OF IDLENESS: 

IDLEC05T CAUSE 



1 35% 



20.5% 



9% 



Idlt - 



#270. 00 MILL SHUT DOWN FOR 4'/ z DAYS. 



h57o 34-5.20 



LACK OF LOAD. 



-h 



160.00 



SPARE PROTECTIVE CAPACITY. 



115. ZO 



TOTAL NON-USE CHARGE. 

__] I I 



SOILER 
HOUSE 



ENGINE 
ROOM 



ENTIRE 
PLANT 



Fig. 115. — Expense of Idleness in a Typical Factory Power House 
The chart represents the average distribution of idleness and idle costs of a 
large number of factory and mill power plants, both during and before the war. 



357 

If during a month the steam output was 15,300,000 pounds 
and the electrical output 160,000 kilowatt hours, the charges were 
prorated as follows: 

On steam plant Absorbed Idle Total 

( 15,300X 2.5)=4382.50 423.00 805.50 

On electric plant 

( 16O,000X .202) =$323.20 



352.20 



675.40 



$795.70 775.20 1480.90 

In other words, more than half of the capacity of the plant was 

idle during this month. This in, itself was analyzed by causes as 

follows : <yS 

. . , ,. Lack of load when running $345.00 

Avoidable j Mm ghut down 4 5 ^^ $270.00 

Unavoidable. Reserve capacity $160.00 



$775.20 

This rather lengthy story is clearly represented on a chart (see 
Figure 115) which requires no further explanation. 

Another interesting case is shown by the chart Figure 116 
representing several months performance of a power plant serv- 



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Fig. i i 6. — Power House Idle ^Expense Report 
Factory power plant having capacity in excess of the shop demand for power, 
causes the increase in cost of power by 11.22% due to excessive ownership ex- 
penses. 



358 

ing a large manufacturing concern. The value of the plant was 
taken as follows : 

Furniture and fixtures $612.50 

Electric wiring 2,236.32 

Machinery 260,272.41 

Tools 498.53 

Piping 65,750.37 

Motors 3,911.86 

Power wiring 9,507.27 

Shafting and belting 375.46 

Foundations machinery 8,219.65 

Power machinery 1,307.02 

Structures 138,131.19 

Tunnels and conduit 21,446.04 

Sprinkler system 27.00 

Fire lines 2,361.35 

Extinguishers 5.25 

Reservoirs 18,138.55 

Total $532,800.77 

The accounting department fixed a monthly charge on this 
plant at only $4000 which is extremely low. The total capacity 
of this plant is 50,000,000 pounds of steam per month. Allow- 
ing 20 per cent of this capacity for protection, regular repair, 
and unavoidable periods of low demand (lunch hour) we can 
safely secure from this plant a monthly output equivalent to 
40,000,000 pounds of steam. The fixed charges thus distributed 
through the full safe output make a surcharge per 1,000 pounds 
of steam equal to 10 cents. The actual situation is represented 
by the chart of Figure 116. It appears that on the average of 
nine months, 59.4 per cent of the plant capacity remained un- 
productive and that during the same time for this cause alone the 
increase in expense of the product (power) due to this cause 
alone was 11.22 per cent over what it would have been if the 
factory had the use for the full capacity of the power plant. 

This last figure, however, is in reality underestimated, since 
at that time, with low load and poor operating practice the oper- 
ating cost per 1,000 pounds of steam converted into diverse 
forms of power was about 75 cents. The same plant after a new 
mode of management was inaugurated, generates 1,000 pounds 



359 

of steam converted, for 48 cents, the true increase of expenses 
due idleness was therefore approximately 25 per cent. 

A situation, as disclosed above, presents a serious problem 
for the management and, as in the case cited, where lack of de- 
mand for power was principally caused by the factory running 
light, the matter was presented to the sales manager who, realiz- 
ing the situation, succeeded in securing enough work not only 
to absorb the expense of idle equipment, but indeed a year after it 
became necessary to install in this plant an additional turbo- 
generator to take care of the increased factory load. 

How evidently wrong is the practice of charging the expenses 
incurred during the idleness of , the plant equipment against the 
product manufactured in a factory not requiring all power equip- 
ment is thus gradually realized by manufacturers and by the 
public at large. Yet the question of whether it is right for the 
public utility company to charge against its customers the ex- 
pense of keeping a large portion of its generating equipment 
idle 128 has not received so far its due attention. 

Mr. W. F. Schaller, in his address at the Boston meeting of 
The American Society of Mechanical Engineers in 1917, referred 
to this matter in connection with his topic of conservation of 
power resources by means of cooperation between central sta- 
tions and private power plants. Said he : 

"Any expense which is necessary merely to supply these 300 
hours or so of peak load should under any proper system of 
bookkeeping be charged with the interest, depreciation and other 
fixed charges arising from the investment necessary to supply 
this peak is not confined to the generating station, but extends 
in increasing proportion to the sub-station, the feeder and main 
system and the service and meter in connection. In other words, 
if one-half of the total investment in generating plant, transmis- 
sion system, sub-station, feeders, mains service connections 
and meters is made necessary in order to supply the peak load 
lasting 300 hours during a year, the cost of supplying this peak 
load for these 300 hours is the sum of the operating cost and a 
due proportion of the overhead charges and one-half of the total 
fixed charges. These fixed charges would include interest on the 
total investment, rental of subways, renewal and contingency 
reserve, probably the larger portion of the taxes would also have 
to be included under the fixed charges divisible in the way stated. 
These fixed charges would ordinarily amount to more than the 



360 

total operating expenses. In one large company — to give a 
concrete example — the operating expenses per kilowatt hour de- 
livered to the consumer were 1.96 cents. The fixed charges as 
enumerated above were approximately 2.5 cents per kilowatt 
hour. The total of fixed charges was in the neighborhood of 
$10,000,000 and the operating expenses about $8,000,000. The 
total number of kilowatt hours delivered to consumers was over 
400,000,000. If we call the peak of the load that over 70 per 
cent of the maximum and we assume that this peak was delivered 
for 400 hours a year the maximum load being 210,000 kilowatts hours 
found 25,000,000 kilowatt hours or 1/16 of the total amount delivered 
to consumers would equitably have to bear 30 per cent of the 
fixed charges and in the case discussed this would amount to 12 
cents per kilowatt hour, which of course would be in addition 
to the operating expenses. Carrying the discussion further, it will 
be remembered that one kilowatt of the peak at the station was 
required for each kilowatt of the large user's demand so that 
properly speaking the larger user costs the public utility 12 cents 
per kilowatt hour for the peak load required by him. On the 
other hand the residence consumer, who only requires one-fourth 
of a kilowatt for every kilowatt of maximum demand in his 
residence, costs the public utility company about 3 cents per 
kilowatt of maximum demand. The commercial consumer at 
retail quantities would come in somewhere between the two. 
This is interesting in connection with the claim so frequently 
advanced that the large consumer is less costly to supply than 
the small consumer." 

While the above quotation is used merely as an example, 
the conditions mentioned are typical enough to emphasize the 
fact that in the case of public utility service the expenses ac- 
cumulating during the idleness of generating and transmissoin 
equipment require more study than they have heretofore re- 
ceived. Furthermore, it is clear to any unbiased mind that while 
the character of the service offers some complication to the 
solution of the problem, the off-peak load or productive use 
of the otherwise idle equipment, should reduce the burden of idle 
charges, yet the attractive rates for such services are frequently 
offered at the expense of another group of consumers, thus sub- 
stituting an evil of idleness by another evil of taxing the weakest 
consumers for the service given to others. 



361 



Classification of Expenses 

In order to meet the fundamental requirements of cost keep- 
ing, all expenses incurred must be properly classified. There are 
three main groups of expenses: 

1 Productive expenses 

2 Non-productive expenses 

3 Expenses of idleness. 

Productive expenses are all such expenses as must be neces- 
sarily incurred to produce the^commodity of desired quality and 
in desired quantity and thus^ contribute to the value of the 
product. 

Non-productive expenses to the contrary, are such expenses 
that either may be eliminated altogether or have no bearing on 
the quality or value of the commodity actually produced. Ex- 
cessive fuel consumption may exemplify this group. 

Expenses of idleness include such expenses as rent, interest, 
depreciation, insurance, etc, of the idle portion of the plant, 
damages due to interruption of service and the like, prorata on 
the output of administrative business and other expense if the 
plant is not operated at its safe full capacity and, in case of 
the complete shut down of the plant, it comprises all the ex- 
penses incurred during the period of idleness or caused by it. 

In this connection it is important to note that in a manu- 
facturing concern the power plant represents merely an aux- 
iliary department and therefore in all matters of cost keeping 
and accounting it should be considered as an outside concern in- 
dependent of the establishment it serves. It should be con- 
stantly borne in mind that the service it renders could be bought 
from outsiders and for this reason the factory power plant 
should be operated as if it were in competition with power plants 
belonging to other people. On this basis it should show a profit 
or loss to the business. The charge for its service should be 
made on the basis that this plant was being operated at its 
full capacity, that is in case the demand of any of the manu- 
facturing departments is below the allotted capacity, it should 
be charged with the expense of ideleness of the plant, yet this 
charge should be shown separately from the service charge 
proper. By means of such comparisons and consideration of the 
"unabsorbed burden" of the power plant, it will be possible to 



362 

estimate what economy results from operating one's own plant, 
or what the convenience of having it is costing the concern. 

The same reasoning applies in the case of a public utility 
company having auxiliary departments such as a carpenter shop, 
a creosoting plant, a machine shop, a laboratory, etc., as it is 
essential to know what are the advantages of having these as 
against having these respective services rendered by outside 
establishments. There is no necessity of describing here in 
detail all possible methods of classification intelligently adapted 
to the nature of the work done and based on the principle of 
such a division as is here discussed and which allocate the use- 
less waste caused either by incompetence or ideleness. By way 
of reference, mention can be made of two successful attempts to 
classify the itemized expenses, without however, a clearly drawn 
division line between productive, useless and idle expenses. The 
first one was devised in 1912-13 for the Penn Central Light & 
Power Co. and the second is the standard method of accounting 
adopted by the National Electric Light Association. Whatever is 
the practice, the following grouping of expenses helps materially 
to properly allocate any item. 

Administration expenses include supervision, foremanship, 
business expenses, transportation, general supplies, rearrange- 
ments and betterment, damages and liabilities and all overhead 
or fixed charges. 

Auxiliary expenses may be regarded as a subdivision of ad- 
ministrative expenses and are those incurred from outside ; such 
as laboratory, trucking, machine shop, etc. Separation of this 
kind of expenses is necessary for decision whether or not the 
continuation of their services is desirable. 

Maintenance expenses are those necessary to maintain the plant 
in perfect operating condition at all times and include all labor, mate- 
rials and supplies used in the maintenance and repair of the property 
and equipment, but do not cover expenses of running operating 
upkeep. 

Operating expenses are those incurred for securing all such 
labor, materials, supplies, etc., which are used in the process of 
generation and are transformed into power in one form or another. 

Each one of these classes should, of course, be further sub- 
divided into such detail and separate items as may be warranted 
for the purpose of itemized analysis of expenses. Allocation 
and measurement of waste and derivation of true cost of product 
and idle or non-productive expenses. As has been shown before, 



363 

rent and other fixed charges on the idle portion of the plant 
are segregated and kept not as a part of cost of product but as 
business loss and their relative magnitude serves as an incentive 
and guide for the efforts of the new business department in a 
public utility company, while in a factory power plant such a 
business loss on excess power capacity may indicate either lack 
of work in manufacturing departments or else an original over- 
estimation of power requirements. A remedy may be found 
by increasing manufacturing while in the second case either 
by disposing of excessive power equipment or by selling power 
generated by otherwise idle equipment. The author has had 
experiences along such lines and the price at which the isolated 
plants were able to furnish power to outside customers was but 
a fraction of usual public utility rates. 

Obviously administrative expenses shall be treated in the 
same manner. If an administrative organization maintained at 
a certain expense is capable of handling the plant producing full 
output, half of the output should not bear double surcharge as the 
consumers do not get any additional value from a "kilowatt hour" 
thus overburdened. 

Similarly the expenses of maintenance remain nearly the 
same whether the plant is loaded to the safe-full capacity or 
greatly underloaded. The simplest and most logical way of pro- 
rating these expenses between a productive and non-productive 
group is by the percentage of the actual output to the pre- 
determined safe-full output of the plant. A kilowatt hour is 
thus a convenient unit for an electric plant, while in a factory 
power plant furnishing a variety of forms of power the basic 
form-steam measured say by 1,000 pounds or in boiler horse- 
power renders a fair and convenient basis. 

In this manner the classification of expenses is carried at 
once in two directions — as to item : by classes such as operation, 
maintenance and administration ; as to groups : such as pro- 
ductive, non-productive and idleness. On an actual form in use 
by several manufacturing plants reproduced in Figure 117 this 
double classification is plainly illustrated, class divisions being 
arranged vertically and group divisions horizontally. We will 
return to this subject under the heading expense analysis. 

A not uncommon purpose to which cost reports are some- 
times put is that of a comparison of expenses incurred in power 
production either in the same plant a year or a month ago, or for 
a comparison of expenses of different plants either competing 



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ther Items Chg. to Pow. St 

Total 






1- 




Dollars 
er Cen 
x., Per 

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. per net kw-hr. Outp 








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3 66 

or cooperating. In the first instance it is sought to visualize 
the progress made; this is obviously a hopeless task unless the 
expenses are grouped in the manner permitting direct com- 
parisons of non-productive and idle expenses, corrected for 
price of materials and labor, etc. Figure 118 represents a cost 
report carried only as to classes, hence the attempts at super- 
ficial comparisons of one month reports with reports of other 
plants is utterly futile so far as help to the operating force 
is concerned. In this case we must resort to the use of our stan- 
dard or ideal predetermined cost (see Figure 111 and 113). In 
the second instance the efforts spent for comparing cost re- 
ports of different plants are even more likely to be fruitless of 
results, as has been pointed out in this chapter under the heading 
of predetermination of cost. 

One of the functions to which our methods of cost keeping is 
particularly adapted is to enable the superintendent of plants or 
chief engineer to know whether or not he is doing the work he is 
responsible for as economically as possible. 

This function is ignored in a majority of cost systems and statisti- 
cal comparisons are devised so, as to make them admirably success- 
ful in making an engineer responsible for blunders committed by the 
builders of the plant or the shortcomings of the business. Among 
the greatest sins committed in our industry two are most common 
and extremely harmful. These are : 

1 Lack of supervision 

2 Over-equipment. 

Late in the autumn of 1914 the author called a conference of 
operating engineers and superintendents of plants interchanging 
statistics and cost data. At this meeting, held in the rooms of The 
American Society of Mechanical Engineers, a plea was made to 
establish either individual standards for each plant so as to judge 
how close each management approached its goal or to agree on a 
definite method of determination of a "factor of merit." A com- 
promise was reached in the agreement that the number of B. t. u. 
consumed per kilowatt hour would be reported together with the 
load factor, the price of coal and the output, all uniformly reported 
on a net basis. This elucidated the subject and enabled them to 
make a more intelligent comparison of cost data. 

In 1913, Mr. H. G. Stott in a paper before the American Insti- 
tute of Electrical Engineers presented a method for comparing the 
cost of performance of different plants by simply determining the 



3^7 



THE COMPANY POWER PLANT COST ANALYSIS REPORT 

Month May, 1918 

Total Coal Used 1910 Tons 

Total Steam Generated 24,212,299 Lbs. 

Average Boiler Efficiency 51.2 Per Cent 



Labor 



Material 



Total 



Unit 
Cost 



Standard 



MAIN POWER HOUSE 
HDO — Total operation 



P— Coal 

W— Water 

B — Boiler-room wages 

E — Engine-room wages. . . . 
L — Lubricants and wastes. 
S — Supplies, miscellaneous , 
U — Unclassified expenses . . 
X — Credit 



2,083.79 
443 . 64 



$11,212.76 

6,717.59 

1,534.73 

2,083.79 

443 . 64 

4.09 



46.3 



36.5 



^2,10.00 



218.92 



428.92 



HDA — Total administration 

A — Foremanship 

B — Business expenses 

E — Experiments 

C — Fixed charges 

H — Light and power in power house. 

R — Reclamation 

W — Labor 

S — Supplies 

Y— Yard 

Z — Rearrangement 

X— Credit 



426. 37 



$54.44 



$1,137.14 

426.37 

54.44 



319.55 
31.09 



Per 
1,000 

lbs. 
Steam 
(4.6c.) 



955.55 

(year 
average) 



241.28 



92.61 



2.89 
241.28 



HDM — Total maintenance • • • 

C — Coaling equipment 

D — Distributing system 

B — Boilers and auxiliaries . . . 

G — Generating turbines, auxiliary. . . 

A — Air compressors 

R — Refrigerating equiapment 

H — Hydraulic machinery 

P — HP piping 

S — Switchboard and transmission . . . 

M — Meters 

T — Tools and implements 

F — Furniture and fixtures . . . ., 

W — Heating and seasoning equipment. 

Z — Buildings 

X — Credit 



$30 . 00 

15.50 

211.45 

6.10 

64.60 

7.50 



$17.31 

50.00 

112.35 

9.09 

40.08 

.42 



$614.82 

47.61 

65.50 

323.80 

15.19 

104.68 

7.92 



2.5c. 



$500 . 00 
(year 
average) 



12.40 

1.68 

8.09 

.14 



8.11 



2.00 
14.60 



20.51 

1.68 

10.09 

14.74 



3.10 



3.10 



HD — Total Main Power Plant Production 



12,964.22 



(53.4c.) 



Less Idleness in Main Plant 



693.66 



50.7c. 



42.6 



Auxiliary Plant No. 1 

Fuel 

Boiler-room wages 

Boiler maintenance and supplies. 



93.60 



144.05 
123.50 



40.41 



401.56 



Auxiliary Plant No. 2 

Fuel 

Boiler-room wages 

Boiler maintenance and supplies. 



279.06 



46.80 



325.86 



Auxiliary Plant No. 3 

Fuel 

Boiler-room wages 

Boiler maintenance and supplies. 



290.27 



290.27 



HD — Total charge to Manufacturing 
Departments 



1,017.69 



Total expense of H. D. Department 



13,982.48 



Fig. ii8 



368 



factors of merit, and, for illustration we shall work the comparative 
production costs in accordance with this method. 

A direct comparison of absolute figures is incorrect and there- 
fore unjust. Power plants, in the first place, have a certain inherent 
maximum attainable thermal efficiency which cannot be exceeded. 



45.000 



40,000 



35,000 



30,000 



5 25,000 

a 



m 20,000 



o 
o 

15.000 



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Jan.1913 Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov. Dec. Jan.1914 Feb. Mar. 
Fig. n8a. — Monthly Comparative Cost Report 



369 

They burn coals of various heating values and ash content, for which 
various prices are paid. The nature of their loads is dissimilar as 
regards load factor and fluctuation characteristics. This brings out 
the need of some uniform method for determining the cost of power 
in steam plants whereby the cost in the different plants may be 
corrected to allow for variations in the load conditions, the cost and 
quality of fuels, etc. 

Probably the two most important factors which affect the costs 
are the cost of coal and the inherent thermal efficiency of the plant. 
A rough attempt has been made to standardize the figures given in 
the comparative statement by the employment of reduction factors 
for the two items above mentioned. In the following comparison 
station C is taken as unity. 

The simplest method of cost comparison whenever they are 
not reported on comparable basis, is to establish correction factors 
for the various plants and then adjust accordingly the total produc- 
tion costs. The average cost of coal for the period covering 
January, February and March, and the corresponding correction 
factors are as follows: 

Plant Correction Factor 

P— $ 2.50 1.088 

Y— 2.054 1.325 

L— 2.61 1.042 

C— 2.72 1.000 

J— 1.61 1.689 

The method of procedure is to correct the unit cost of fuel, take 
the difference between this value and the actual fuel cost and 
add this difference to or substract it from the total unit cost 
of production. Applying this correction we arrive at the follow- 
ing figures, with plant C as unity: 





January 


February 


March 


Plant 












Actual 


Corrected 


) 

Actual 


Corrected 


Actual 


Corrected 


P 


0.495 


0.526 


0.553 


0.583 


0.468 


0.496 


Y 


0.469 


0.560 


0.487 


0.581 


0.474 


0.567 


L 


0.440 


0.453 


0.436 


0.449 


0.418 


0.430 % 


C 


0.5066 


0.5066 


0.5355 


0.5345 


0.5248 


0.5249 


J 


0.561 


0.742 


0.528 


0.696 


0.564 


0.744 



37o 

Using Mr. H. G. Stott's method for determining this factor 
we have : 

Figure of Merit = 

B.t.u. per ton (moist) r^r cashXB.t.u. per lb. of refuse 

Price per ton 

To correct this for the cost of coal, a reduction factor is neces- 
sary which is : 

Figure of Merit, Plant X, in our case 
Figure of Merit, Plant C 

Then apply this reduction factor as was done in the preceding 
paragraph. A uniform ash percetage of 8 per cent was assumed 
for all stations for the want of more exact data. The figures 
are as follows, as an average for January, February and March: 



Plant 


Cost, Dollars 


B.t.u. 


Figure of Merit 


Factor 


P 


2.50 


14,050 


11,000,000 


1.088 


Y 


2.054 


12,000 


11,380,000 


1.124 


L 


2.61 


13,980 


10,470,000 


1.033 


C 


2.72 


14,060 


10,110,000 


1.000 


J 


1.61 


11,690 


14,110,000 


1.395 



The corrected production costs follow : 



Plant 


January- 


February- 


March 




Actual 


Corrected 


Actual 


Corrected 


Actual 


Corrected 


P 
Y 
L 
C 
J 


0.495 

0.469 

0.440 

0.5066 

0.561 


0.526 (4) 
0.504 (2) 
0.450 (1) 
0.5066 (3) 
0.669 (5) 


0.553 

0.483 

0.436 

0.5355 

0.528 


0.583 (4) 
0.523 (2) 
0.446 (1) 
0.5355 (3) 
0.625 (5) 


0.468 

0.474 

0.418 

0.5248 

0.564 


0.522 (1) 
0.588 (4) 
0.532 (3) 
0.5248 (2) 
0.720 (5) 



A factor of merit to compensate for inherent thermal effici- 
ency variations may be determined as follows: From the fig- 
ures given on the report as B. t. u. per net kilowatt-hour out- 
put the tabulated average thermal efficiencies for January, 



37i 

February, and March are found with corresponding factors of 
merit plant C as unity: 



Plant 


Thermal Efficiency 


Factor of Merit 


P 


9.1 


1.052 


Y 


10.0 


1.156 


L 


10.7 


1.242 


C 


8.64 


1.000 


J 


9.2 


1.063 



Application of this factor to ^tl>e production costs corrected for 
coal is shown in the following tables 



COAL CORRECTION 





January- 


February 


March 






Coal 


Efficiency- 




Coal 


Efficiency 




Coal 


Efficiency 




Actual 


Cor- 


Cor- 


Actual 


Cor- 


Cor- 


Actual 


Cor- 


Cor- 


Ph 




rection 


rection 




rection 


rection 




rection 


rection 


p 


0.495 


0.526 


0.554 (2) 


0.553 


0.583 


0.614 (3) 


0.468 


0.496 


0.522 (1) 


Y 


0.469 


0.560 


0.642 (3) 


0.487 


0.581 


0.672 (4) 


0.474 


0.567 


0.655 (4) 


L 


0.440 


0.453 


0.563 (4) 


0.436 


0.449 


0.558 (2) 


0.418 


0.430 


0.534 (3) 


C 


0.5066 


0.5066 


0.5066(1) 


0.5355 


0.5355 


0.5355 (1) 


0.5248 


0.5248 


0.5248(2) 


J 


0.561 


0.742 


0.789 (5) 


0.528 


0.696 


0.740 (5) 


0.564 


0.744 


0.792 (5) 



STOTT'S COAL CORRECTION 





January 


February 


March 






Coal 


Efficiency 




Coal 


Efficiency 




Coal 


Efficiency 


a 


Actual 


Cor- 


Cor- 


Actual 


Cor- 


Cor- 


Actual 


Cor- 


Cor- 


y— 1 




rection 


rection 




rection 


rection 




rection 


rection 


p 


0.495 


0.526 


0.554 (3) 


0.553 


0.583 


0.514 (2) 


0.468 


0.486 


0.522 (2) 


Y 


0.469 


0.504 


0.582 (4) 


0.487 


0.523 


0.605 (4) 


0.474 


0.509 


0.588 (4) 


L 


0.440 


0.450 


0.559 (2) 


0.436 


0.446 


0.504 (1) 


0.418 


0.428 


0.432 (1) 


C 


0.506 


0.506 


0.506 (1) 


0.535 


0.535 


0.535 (3) 


0.524 


0.524 


0.524 (3) 


J 


0.561 


0.669 


0.712 (5) 


0.528 


0.625 


0.665 (5) 


0.564 


0.667 


0.720 (5) 



372 

From the above it is seen that in every case the correction 
for the cost of coal advances plant C one or more places while the 
final correction for thermal efficiency moves plant C to the 
point of lowest operating cost, except in March, when it takes 
second place. Less favorable effect observed when Stott's 
method of coal correction is used. It will be noted that unit cost 
for the first six months of 1914 was in plant C 0.685 per kilowatt 
hour, whereas an average for 1915 is 0.5223 per kilowatt hour. 
This indicates a cost reduction of 23.7 per cent per kilowatt 
hour or on the basis of the average output the gross saving 
accomplished amounts to upward of $175,000,000 per annum. 

Analysis of Expenses 

For the sake of a brief review of the use of this compiled 
cost data a few monthly cost summaries are here reproduced 
taken from different power plants. The table Figure 118 shows a 
report of a factory power plant running at a low boiler efficiency 
(51.2 per cent) and greatly underloaded since over 60 per cent 
of the power capacity is idle. Another peculiarity is too low 
a payroll due to a shortage of men employed, as well as too low 
a rate at which no good men can be had. Comparing the actual 
cost with the predetermined standard, the managerial efficiency 
is about 90 per cent, while the efficiency of the operating end 
is only 87.3 per cent. The thermal efficiency of the boilers was 
51.2 per cent yet the commercial economy is 71.5 per cent since 
the standard thermal efficiency of that boiler plant was deter- 
mined at 71.5 per cent as best possible long average perform- 
ance. 

From this analysis the problem before the management ap- 
pears in a concrete form. To save $20,000 per year, additional 
men must be employed and all should be better paid ; with thus 
improved relations a better method of firing and care of boilers 
should be devised reducing materially the coal consumption 
and at the same time the maintenance expense which is tem- 
porarily high due to a run down condition of the plant which 
will gradually be lowered as periodic inspection and scheduled 
overhauling is inaugurated. 

A parallel analysis of the table in Figure 120 and Figure 121 
is of interest as they fairly illustrate the progress of a plant 
within seven months of operation after the company had inaugu- 
rated our methods. Meanwhile the factory secured more work 
as indicated by an increased load on the plant and increased pro 



373 



MONTHLY EXPENSE STATEMENT 



.Power Plant 



For Month of July, 1915 



oxx 


Operation 


Labor 


Material 


Total 


Unit Cost 


OXXB 


Boiler-room wages 


$2,606.45 
577.80 




$2,606.45 

39,286.23 

1,235.94 

112.81 

1,434.70 

1,203.68 

379.12 

24.38 

290.96 

130.08 


.02488 


P 
W 


Fuel 

Water 


$38,708.43 

1,235.94 

112.81 


.37508 
.01179 


S 


Boiler-room supplies 




.00108 


G 


Engineer's wages 


1,434.70 

1,203.68 

67.45 


.01370 


E 


Electrical wages 




.01150 


L 


Lubricants and waste 


311.67 
2.38 


.00362 


M 


Miscellaneous supplies and expenses . 


.00022 


A 


Superintendence and administration . 
Records, timekeeper's office 


290.96 
132.68 


.00278 


O 
X 


** 2 . 60 


.00124 


u 












I 




































oxx 


Total for month ^ 


$6,313.72 


$40,390.63 


$46,704.35 


.44589 










Six months' average 


$6,165.37 


$36,745.48 


$42,910.85 


.45106 








MXX 


Maintenance 


Labor 


Material 


Total 


Unit Cost 


MXXB 


Land 


$116.95 

34.00 

*69.55 

892.85 




$116.95 
34.13 
69.55 

1,314.62 


.00111 


C 


Buildings 


.13 


.00033 


D 


Dams, canals, etc 


. 00066 


E 


Boilers and auxiliaries 


421.77 


.01257 


F 






G 












H 

J 
K 


Engines, turbines, auxiliaries 

Generators and exciters 


494.65 
12.82 

194.05 
11.05 
25.60 
22.80 

114.80 

140.80 


*360.29 
10.25 
24.81 
13.25 


854.94 

23.07 

173.86 

24.30 

25.60 

127.36 

249.32 

195.83 


.00816 
.00022 
.00166 


L 


Switchboard 


.00022 


M 


Transformers in station ; . 


.00023 


N 


Station meters 


104.56 

134.52 

55.03 


.00121 


P 


Coal storage and hand 


.00239 


Q 

R 


Station piping 


.00187 


S 


Tools and implements 


77.85 
58.40 


95.32 
173.35 


173.17 
231.75 


.00166 


T 

u 


Furniture and fixtures in station .... 


.00221 


V 


Unemployed time, maintenance men 
Unclassified upkeep 










w 


3.87 
280.89 


33.85 


37.72 
280.89 


.00036 


X 




.00268 








MXX 


Total for month 


$2,505.93 


$1,427.13 


$3,933.06 


.03756 










Six months' average 


$2,546.39 


$1,824.02 


$4,370.41 


.04593 








PXX 


Production 


Labor 


Material 


Total 


Unit Cost 


PXX 


Total for month 


$8,819.65 


$41,817.76 


$50,637.41 


0.48345 










Six months' average • 


$8,711.76 


$38,569.50 


$47,281.26 


. 49699 



Output 



K.W.H. 



B.H.P. 



Total generated during month 
Total purchased during month 

Grand total 

Lbs. coal per K.W.H 

Load factor 



10,471,360 

000 

10,474,360 

2,716 

86.2% Mach. 



49.9% Peak 



Clerk 


Plan Engineer 


Chief Engineer 


Accountant 


File 


G. S. 


W.F.S. 


Ch. P. 


— 


8-5-15 



Fig. 119 



374 



Month, December, 1918. 
POWER PLANT 
COST ANALYSIS REPORT 



Total Coal Used 1,965 . 32 Tons 

" Steam Generated 21,658,527 lbs. 

Average Boiler Efficiency 45 . 7% 





Labor 


Material 


Total 


Unit Cost 








$2,316.96 

728.97 

81.72 

.67 

488.49 


$10.65 


























































545.15 
78.03 

444.02 
21.67 
81.76 












Y— Yard 






































4,183.18 

53.41 

46.27 

2,270.73 

2,738.22 

14.50 

13.53 

131.17 

9.00 

2.95 

7.16 

260.20 

28.48 

45.28 

27.73 

1,465.45 


19.28 








































































































































$17,669.42 
17,264.94 


$81.40 


P— Coal HD 








W— Water 














1,837.89 

819.31 

62.68 




























U — Unclassified expense 
















2,315.40 












HD — Total Main Power Plant Production 






24,169.56 


111.33 










Idleness in Main Plant 






1,056.53 

















$1, 266. 40 


1,266.40 
314.54 
273.29 






314.54 
























227.41 

283.56 

41.26 


































243.91 

305.96 

21.56 




























HD — Total charge to Manufacturing 
Departments 






$2,977.89 












Total expense of H. D. Department 






27,147.45 













Fig. i2o 



375 



Month, July, 1919. 

POWER PLANT 
COST ANALYSIS REPORT 



Total Coal Used 1,774.44 Tons 

" Steam Generated 36,127,500 lbs. 

Average Boiler Efficiency. 72. 0% 



- 


Labor 


Material 


Total 


Unit Cost 




$927.07 
440.35 


$640.50 


$1,567.51 

440.35 
120. 0C 


$4.30 








120.00 














385.27 


385.27 






















133.41 




133.41 
23.47 

484.61 
27.40 






23.47 
158.70 




y — Yard 


325.91 
27.40 
























11 ■ ~ O 


534.17 


2,848.91 
44.15 


3,383.09 

44.15 


9.35 














534.17 


691.32 

1,321.69 

41.95 

163.82 

35.27 

8.76 

3.33 

14.32 

29.51 

204.30 

36.60 

253.89 


1,225.49 

1,321.69 

41.95 

163.82 

35.27 

8.76 

3.33 

14.32 

29.51 

204.30 

36.60 

253.89 






















































































2,198.46 


9,838.14 

9,138.37 

470.40 


12,036.60 

9,138.37 
470.40 

1,451.93 

746.53 

174.95 

54.42 


33.20 


F— Coal HD 


25.3 










1,451.93 
746.53 












174.95 
54.42 


































. 


HD — Total Main Power Plant Productoin. . 


3,659.70 


13,327.55 


16,987.25 


46.80 


























585.56 








334.80 


1,150.12 






229.76 
















148.16 








282.72 


442.32 






11.44 
















81.96 








230.23 


312 . 19 




















HD — Total charge to Manufacturing 
Departments 


847.75 


1,056.88 


1,904.63 




Total expense to H. D. Department 


4,507.45 


14,384.43 


18,891.88 





Fig. i2i 



376 

rata of business expenses. The average boiler efficiency was im- 
proved from 45.7 per cent to 72.0 per cent and consequently 
14,468,973 more pounds of steam were evaporated with a coal 
consumption reduced by 190.88 tons. The total expense was 
decreased by $7,182.31 the fact of particular interest being that 
the saving on the coal bill was $8,126.57 although about 60 per 
cent more power was generated, which of course was made pos- 
sible by selecting a different grade of coal mixture with anthra- 
cite culm, use of forced draft, etc., affecting the price of coal per 
ton which was reduced from about $8.90 to $5.15. 

Referring now to the table of Figure 119, which is the monthly 
expense statement of a railway plant, it may be fitting to state 
that this report was accompanied with the following note: 
"The cost of production at the power plant for July, the first 
month of operation in the second year under the new mode of 
management, was 0.48345 cent per kilowatt hour. For the 
month of July one year ago the cost was 0.558 cent per kilo- 
watt hour. The saving of 14 per cent or about $85,000 on 
annual basis was accomplished without physical improvement 
of any kind." In other words the managerial efficiency was im- 
proved within a year from 63.5 per cent to 89 per cent while the 
operating cost efficiency for the month illustrated was 90 per 
cent compared with the standard cost. 

The cost record table shown in Figures 123 and 124 can be 
studied in connection with the standard cost curves reproduced 
in Figures 113 and 111. In this connection it might be of 
interest to note that the attainment of such high efficiency by the 
plants of this public utility company permitted a revision of 
their rates and resulted in a very material reduction to the con- 
sumers with correspondingly increased net revenue of the com- 
pany. 

The table of Figure 122 is of interest inasmuch as this cost 
report compiled for a small industrial plant takes full cognizance 
of the importance of accurate accounting of idle and non-pro- 
ductive expenses. 

For the convenience of analyzing expense data they should 
always be accompanied by explanatory notes giving account of 
the reasons for the principal fluctuations in cost such as changes 
in prices, necessity of special work, changes in load conditions, 
etc., which otherwise would remain obscure in a purely financial 
statement. An example of such a report prepared in the Super- 
intendent's office of an electrified railroad follows: 



377 

"Studying the monthly expense statement for December, 
1914, and accompanying cumulative records of plant perform- 
ance, it might be of interest to note the following points : 

"Fuel. Total amount of coal consumed was checked by larry 
scales against the bills of lading. The bill of lading weight 
shows 26,837,520 pounds whereas the larry record showed 26,- 
738,134 pounds, this being within three-fourths of one percent 





POWER COST ANALYSIS 


Period X 


Ended Oct, 14, 1919. 




Symbol 


Class of Expense 


Total 
Expense 

/ 


Non- 
productive 
Expense 


Productive 
Expense 


Unit Cost 

per 

M. Lbs. 

Steam 


Non- 
pro- 
ductive 
Ratio 


AHA 

E 


Total administrative expense . . 
Indirect expense 


$863.34 
827.32 

36.02 


$491.24 
470.75 

20.49 


$372.10 
356.57 

15.53 


.066470 
.063696 

.002774 


56.9% 


B 


Experiments and rearrenge- 
ments 




X 




















AHM 

W 

s 

X 


Total maintenance 

Maintenance, labor and burden 
Maintenance material 


$332.48 

147.37 

197.11 

12.00 


— 


$332.48 

147.37 

197.11 

12.00 


.059393 
.026325 
.035121 
.002143 










AHG 
F 
B 
E 
L 
W 
X 


Total operating expense 

Fuel 

Boiler-house labor 

Supplies and lubricants 

Water 


$3,070.46 

1,928.84 

589.31 

272.00 

181.59 

98.72 


$69.44 
69.44 


$3,001.02 

1,859.40 

589.31 

272.00 

181.59 

98.72 


.536087 
.332154 
.105273 
.048588 
.032438 
.017634 


3.6% 


















Total per 5,598 M. lbs. steam 


$4,266.28 


$560.68 


$3,705.60 


.661950 








526.54 


— 


526.54 














Total AH expense 


$4,792.82 


$560.68 


$4,232.14 







Notes 



Steam generated, total 

Coal consumed, total 

Price of coal per 2,240 lbs 

Heat value of coal per lb. as rec'd, B.t.u. 

wet 

Steam per lb. of coal 

Efficiency of evaporation (factor 1.06) . 

Coal per lb. of product 

Steam per lb. of product 



5,598,120 lbs. 
580,729 lbs. 
$7.18 

13,585 

9.64 lbs. 
72.99% 

2.04 lbs. 
19.67 lbs. 



284,558 lbs. product 







Made Out 


Engineer 


Check 


O. K. 


Initia.Is 


E. M. P. 
11/1/1919 








Date 









Fig. 122 



378 

accurate. The shortage of coal weight can be ascribed to a cer- 
tain extent to the drying out of the coal after crushing and 
handling same in the boiler room bunkers. There is always, 

DETAILS OF OPERATING EXPENSES 
ELECTRIC 



CP 
CPW 


Production 
Water Plant 


November, 
1913 


3 Months 

Ended Nov. 30, 

1913 


Amount 


Per 
K.W.H. 


Amount 


Per 
K.W.H. 


CPWA 


Operation 

Superintendence 


$88.71 
20.28 
97.19 

.29 
68.96 

.87 

5.16 

87.61 

13.45 

15.42 




$186.18 

38.69 

209.83 

.29 

165.77 

1.88 

11.47 

222.01 

41.99 

60.27 




CPWD 
CPWE 


Damages, in jury and liability insurance 
Engine-room wages 




CPWF 


Fuel 




CPWG 


Electrical wages 




CPWJ 
CPWL 


Lubricants 




CPWS 
CPWX 
CPW 


Unclassified production expenses .... 
Production overhead 












Total 


$397.94 


.0004 


$937.38 


.0005 








CPWM-B 


Maintenance 


$11.14 

11.14 

.16 

3.24 

13.56 

.27 

4.16 

3.48 

1.04 

122.96 

.78 

i6!22 

.87 




$2.95 

39.56 

3.56 

3.24 

*50.34 

.98 

9.55 

3.52 

9.17 

124.50 

5-54 

.09 

.08 

1.88 

24.04 

.87 

11.11 




CPWM-C 
CPWM-D 


Dams, canals, tail races 




CPWM-E 


Boilers and auxiliaries 




CPWM-G 
CPWM-H 
CPWM-J 
CPWM-K 


Water wheels, gates and gov 

Engines, turbines and auxiliaries .... 
Condensers 




Generators and exciters 




CPWM-L 


Switchboards 




CPWM-M 
CPWM-N 






COPWM-P 
CPWM-S 
CPWM-T 
CPWM 


Coal storage and freight equipment. . 

Machine tools and implements 

Furniture and fixtures m power station 
Production overhead 




CPWM-U 
CPWM-V 


Board, carfare, maintenance gang. . . 
Unemployed labor, maintenance gang. 






Total • • • • 


$171.88 
$569.82 


.0002 
.0006 


$190.30 
$1,127.68 


.0001 




Total production 


.0006 








CPWS 
CPWX 
CPW 


Station supplies and expenses 

Unclassified production expenses .... 
Production overhead 


87.61 
13.45 
15.42 




222.01 
41.99 
60.27 











Daily Average Output 29,926 KW. Hrs . 

Labor 35 Per Cent 

Standard Unit Cost 000345 

Cost Efficiency . .86.3 Per Cent 

Output by Water Wheels, November 897,770 KW. Hrs., 35 Per Cent 

Fig. 123 



of course, the possibility that the car weights are only approxi- 
mate, weighing of coal being made in Pennsylvania in cars mov- 
ing over a platform scale at a fairly rapid rate. 

"Referring to the weight of coal as shown by the bill of lad- 
ing to the output of the station, we see that the coal consumption 



379 

rate was during December 2.765 pounds per kilowatt hour, 
whereas in November it was 2.78 pounds. 

"Operating Labor. The item of operating labor in the month of 

DETAILS OF OPERATING EXPENSES 
ELECTRIC 



CP 
CPX 


Production 
Steam Plant 


1 

November, 1913 


Three Months 

Ended Nov. 30, 

1913 




Amount 


Per 

K.W.H. 


Amount 


Amount 


Per 
K.W.H, 




Operation 

Superintendence 


J 

$177.47 

1,127.70 

106.08 

179.66 

3,395.44 

120.49 

5.58 

94.85 

182.03 

23.51 

118.03 


De- 
crease 
— or in- 
crease 
+ of 
average 

of 3 
months 


Total 
decrease 
-469.3 


$486.00 

3,447.80 

320.55 

562 . 44 

11,638.80 

453 . 50 

17.28 

125.25 

512.65 

80.03 

345.11 




CPXA 


+ 15 

- 22 

- 1 

- 8 
-484 

- 31 

- 0.3 
+ 52 
+ U 

- 4 
+ 3 




CPXB 


Boiler-room wages 




CPXD 
CPXE 


Damages, injury & lia. ins .... 
Engine-room wages 




CPXF 


Fuel 




CPXG 


Electrical wages 




CPXJ 
CPXL 


Insurance other than liability. . 
Lubricants 




CPXS 
CPXX 
CPX 


Station supplies and expenses. . 

Unclassified pro. expenses 

Production overhead 












Total 


$5,530.84 


.0035 




$17,989.41 


.0037 






CPXM-B 


Maintenance 
Land 


21.72 

.28 

98.09 

94.95 
7.27 
1.60 
1.82 
216.83 
1.36 
.92 

11.90 

11.27 
1.00 

28.53 
1.53 


4 3 




2.07 

115.96 

28 

398^68 

.06 

.99 

355.53 

21.38 

2.26 

60.66 

220.14 

29.17 

4.26 

12.50 

13.42 

16.18 

55.74 

1.53 

23.61 

2.24 




CPXM-C 
CPXM-D 
CPXM-E 
CPXM-F 
CPXM-G 
CPXM-H 
CPXM- J 


Buildings and their equipment. 
Dams, canals and tail races . . . 
Boilers and auxiliaries 

Engines, turbines and aux .... 
Condensers 




CPXM-K 
CPXM-L 


Generators and exciters 

Switchboards 




CPXM-M 
CPXM-N 


Transformers in power station . 
Station meters 




CPXM-P 
CPXM-R 
CPXM-S 
CPXM-T 
CPXM 


Coal storage, wgt. and equip . . 
Ry. siding and coal trestle. . . . 
Machine tools and implements . 
Fur. and fix. in power station. . 
Production overhead 




CPXM-U 
CPXM-V 
CPMX-V 


Board, carfare, maint. gang. . . 
Unemployed labor, main. gang. 
Unclassified production equip. . 






Total . 


$498.97 


.0003 




$1,336.66 


.0003 








Total Production 


$6,029.81 


nma 


S4.1 7 


«in n/; r\i 


.004 











Per Cent Operation to Total Expenses . . 
Per Cent Maintenance to Total Expenses 



91.7 
8.3 



93.1 
6.9 



Steam Generated Output for November 1,569 830 K W Hrs 

Labor Percentage ' ' 55 p er * Q en i 

Daily Average Output ; ; ; ; [ 52.328 K.W. Hrs. 

standard Unit Cost 33 7 

Managerial Cost Efficiency . 96 Per Cent 



Fig. 124 



38o 

December was also reduced as compared with the previous 
month being $6,252.61 as against $6,665.29 in November. This 
saving has been made possible through a reduction of a num- 
ber of men operating the traveling coal larries: it being found 
after time study that one man could attend on the day shifts 
to both old and new boiler rooms. However, these men were 
for a while retained as repair helpers during the progress of cer- 
tain maintenance work going on at the plant, and their resigna- 
tion was not accepted until they had found new employment. 

"Total Labor. This however, did not increase the total payroll 
in December, the cost of labor for both operation and main- 
tenance being $8,674.07 in December as against $9,057.38 in 
November. 

"Material. A slight saving has been accomplished also on the 
item of materials used at the plant in spite of the increased out- 
put, the total material used in December being $1,318.70 as 
against November $1,598.64 which is due to the use of more 
expensive supplies which last longer and prove cheaper in the 
end. The items of fuel and water, however, are not included 
in this total ; they naturally vary with the volume of the output. 

"Maintenance. Going over the items of maintenance we note 
a slight increase in the cost of maintenance in the repair of boil- 
ers and auxiliaries, which is a little over $200 in December 
higher than in November; this being due chiefly to the lack 
of proper fire brick for the regular maintenance of furnaces. 
Item, which was in December somewhat higher than in Novem- 
ber, is the coal storage and handling of fuel. Several improve- 
ments, repairs and the replacement of parts on the coal tower 
and trestle were necessary on account of natural wear, as well 
as winter condition. On all other items of maintenance we 
report a reduction in costs so that in spite of this extra work 
done on the above mentioned items the total labor and material 
for maintenance was $36,029.35 in December as against $36,- 
049.92 in November. 

"Unit Cost. From the above cost analysis it is natural to 
anticipate a certain reduction in cost per kilowatt hour. This 
has been actually accomplished on every item of classification. 
Thus total labor and material per kilowatt hour for opera- 
tion in November was 0.47237, in December was 0.46369. Main- 
tenance labor and material in November was 0.04095, in Decem- 
ber it was 0.03643. Total production per kilowatt hour in No- 
vember was 0.51422, in December 0.49912. In other words, 



381 

with the present rate of operation the kilowatt hour is generated 
for less than one-half a cent as against 0.723 which was an 
average prior to our regime a year ago. 

"Annual Costs. A special report will be prepared on the mat- 
ter of cost of operating the plant during the year 1914. For the 
present we are giving below a condensed statement for the 
unit cost of generating power for the two half years of 1914. 





First Six 
Months 


Last Six 
Months 


Saving, 
Per Cent 


Production average, 


preceding year . 


/ 
0.576 
0.685 
0.723 


0.501 
0.545 


13.02 
20.43 
24.62 



During the month of December plans were prepared and ar- 
rangements completed to start stocking of a coal pile for emer- 
gency use. Originally it was expected that this pile would be 
formed from the coal delivered in cars in order to take ad- 
vantage of the lower freight rate on rail deliveries but as it de- 
veloped the facilities for unloading frozen coal from unsuitable 
cars were inadequate and the cost of handling coal per ton 
reached 43 cents, and though blasting frozen coal with dynamite 
in the cars and handling same manually without expensive 
operation by Brown hoist reduced the cost of handling over 40 
per cent, it was found more advisable to stock the coal delivered 
in boats. This has been actually done at a cost not exceeding 
10 cents per ton piled. 

"Graphic Records. The two sheets of performance record for 
December present a clear picture of the progress of manufac- 
turing, and in this connection it should be noted that the 
variation of the ratio of pounds of coal per kilowatt hour during 
the last two months were considerably less pronounced than 
heretofore, which will undoubtedly be attributed to the greater 
care exercised in the boiler room routine. The total output dur- 
ing December was 9,703,000 kilowatt hours with a machine 
factor brought up as high as 83.5 per cent average, yet the peak 
load factor dropped to 48.7 per cent as against 51.8 per cent 
in November, but practically duplicated the condition of October 
when same was 48.6 per cent. 



3^2 

"Comparison. The comparison of our costs with other plants 
for November on the compiled tabulation of the comparative 
statistics of various power plants interchanging costs for mutual 




Fig. 125. — Graphic Cost Record 

Seven items of operating records are charted on one card to four different 
scales; Time, Unit Cost Monthly Expense and Monthly Output. (Electr. R. R.) 



information, shows that during the month of November we have 
climbed from the last place on the sheet outranking in the cost 
of manufacturing electric power the two other well known power 
plants." 



3*3 

For the purpose of visualizing expenditures incurred for a 
period of time and of studying general trend, temporary deflec- 
tions, deviations from appropriations and similar purposes, a 
graphic chart of expenses should be kept in the superintendent's 
or chief engineer's office. One of the most convenient ways 
is to keep each item on a separate card, cross section ruled to a 
convenient scale of value ordinate and time on abscissa. Each 




Jan. Feb. 



>— cOfi^mvor-axs^q-- cOi^^-u^Pr-co^o— ^t^u>vS>^<os>0.- cCKy^-io^t^so^o— «a 



Mar. I Apri 1 1 May jj une I J ukj I Aucj. Isept.j Oct. 1 Nov. | Dec. 



Fig. 126. — Graphic Cost Record Card 

The chart represents expenses of management and supervision for two con- 
secutive years. During 19 14 the management was carried along the old-fashioned 
lines without planning, without record keeping or cost keeping, whereas in 19 15 
all mechanism advocated by the author had been installed and put into use. 
Managerial overhead expenses, however, did not increase, as the change was sub- 
stantially that of substituting useful analysis work for useless arbitrary bossing. 

card drawn in this manner should have at least two curves — one 
of total expense for each period and another the expense per 
unit produced (unit cost). It is frequently necessary to sup- 
plement this basic information by reference curves such as 
cumulative or progressive total, appropriation, output, efficiency, 
and the like. It is never advisable, however, to plot curves 
of several years on the same monthly or weekly scale as such 
comparison, in order to be made intelligently, and be of service 
requires references to many other variable conditions or specific 



3^4 

changes that may not be remembered at a glance. Examples 
of such expense record cards are given in Figures 114, 125 and 
126, the last having additional interest inasmuch as it compares, 
contrary to the statement just made two years of operation of 
the same plant. During the first year on record the plant had no 
organized office, kept no records, did no planning of work, had 
an insufficient office force and most of the planning and direct- 
ing work was done on the operating floor on the spur of the 
moment by men having no suitable training for analyzing the 
circumstances and administering affairs by tradition and trust- 
ing in good luck. 

During the next year these defects were radically stopped. 
A planning engineer and statistician added to the force as well 
as a stenographer, records were kept in most complete details, 
costs carefully analyzed, planning done in graphic form, store- 
room service organized, maintenance work watched, laboratory 
analyses made, tests carried out, training given in hygiene, 
and first-aid offered to the employees, etc. Yet as it may be 
seen from the expense chart the amount of money spent for 
"administration" varied but by a few dollars from the preceding 
year. At the same time the operating cost per kilowatt 
hours was reduced 24 per cent and the total production ex- 
pense (including rearrangement, repairs and maintenance) de- 
creased 19 per cent. 

In cases where the standard cost or ideal expenses are pre- 
determined in a manner discussed in this chapter, the expense 
charts can be easily supplemented by a graphic relation of 
actual expenses to a standard allotted. Figures 127 and 114 
plainly show how much in this case the record gains in clearness. 
The vertical bars drawn from the bottom of the chart go as 
high as the allotted ideal cost should be; the distance of the 
actual curve from the tops of these bars affords a measure 
of unnecessary expenses. Furthermore in spite of unprece- 
dented high expense per 1,000 pounds of steam (as in May, 
1917, on chart reproduced), comparsion with the standard virtu- 
ally shows that the ideal conditions were almost attained, the 
high cost being due to the high price of coal, efficiency being 
only within 0.5 per cent of the expected boiler and grate effi- 
ciency of the plant, whereas a year ago (May, 1916), the actual 
expense being about 8 cents lower per 1,000 pounds of steam 
on account of cheaper purchase price of coal yet this was with only 
50.25 per cent of boiler and grate efficiency. 



385 



On the other expense chart we see a rapid progress in ap- 
proximating the ideal predetermined cost in certain items of 
operating expense. With an average monthly output of 109,000 
kilowatt hours the monthly expense in 1913 and early in 1914 
was nearly $600, giving a unit cost approximately $0.0055. The 





























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Fig. 127. — Graphic Relation between Actual and Standard Costs 

Pre-determined standard costs per unit of output is represented by the height 
of bars drawn for each month. The distance of curve of actual unit cost from the 
top of the bars represents the over-expenditure, which in the first five months of 
the year, was over 100%, while in the last half of the year, less than 25%. In 
December the actual unit cost was practically that of pre-determined standard. 
The appropriation which would have been insufficient if operation were as ineffi- 
cient as it was in the first half of the year, actually was not exhausted because of 
the rapid improvement in the elimination of waste. 

appropriation for the next year, 1915, however, was made not 
of $7,200 but only half as big, namely $3,600 while actually 
only $3,241 were expended by December of the recorded year 
the actual expenses were already lowered to the level of ideal 
and during 1915 average unit cost was less than $0,003 as against 
an average of $0.0055 of 1913. 



386 



Cost of Purchased Power 

In a number of cases where power is generated the cost 
reports are frequently used as a basis for deciding whether it is 
economical to continue generation of one's own power or greater ad- 
vantages could be secured from a purchase of energy from a 
public utility company. This subject again permits of a dual 
analysis ; first whether there are any advantages from a financial 
standpoint and second whether such a change offers any oppor- 
tunity for national fuel conservation. The fuel administration 
after considerable studies arrived at the conclusion that in such 
establishments where steam is used for processes no advantages 
could be expected from a purchase of electric power parallel with 
the local generation of steam. The reasons for this under the 
existing conditions are obvious — the thermal losses of steam 
after passing through engines or high-pressure turbines are not 
great and exhaust steam may be used for many purposes even 
in preference to live steam. Financially likewise there could be no 
advantage of discarding one's own generating equipment as the 
labor charge is insignificant and sometimes even irreducible, 
while boiler-room labor, supplies and repair usually remain 
unchanged and coal consumption decreased only a few per cent. 

In cases where heating during the winter months is the only 
use of the exhaust steam, or where the exhaust steam has no 
application, the matter is getting more complicated and each 
case should be decided on its own merits. In such instances 
accurate cost keeping is of inestimable value and frequently 
wrong steps are taken because of the lack of reliable cost data 
and operating records. Undoubtedly, in many cases of this kind 
a cooperation between the central station service and the iso- 
lated plant is the most desirable solution of the problem both 
from a financial and a conservation viewpoint. During the 
period when heating is needed, central stations have heavy loads 
and should not care to add to their peaks while the isolated 
plant, utilizing the exhaust steam could attain very high econ- 
omy. On the other hand, when no heating is required the iso- 
lated plant in a general case becomes wasteful and the pur- 
chase of electric service is desirable, while central stations with 
decreased summer demands should appreciate the opportunity 
to improve their load and machine factor, reduce idleness, and obtain 
other obvious advantages from seasonal consumers. Yet, moved 
by motives beyond the scope of this chapter such seasonal serv- 



3§7 

ice is usually refused by the public utilities and some public 
service commissions failed to reach a decision favorable to the 



LEGEND 




|<- -1914 ->[<■ 1915 >|<- 1916 -H 

Fig. 128. — Comparison of Promised Saving and Actual Costs 

The rates for purchased electric power appear very favorable when compared 
with the operating cost of a poorly managed plant. When instead of purchasing 
electricity from outside, methods of management and operation were bettered, 
the offered rates proved to be far in excess of the actual operating expense. No 
credit has been allowed for the use of exhaust steam. 

public and beneficial for the fuel conservation. Small isolated 
plants working purely for light or power are seldom warranted 
economically or financially. Inefficient equipment as compared 



388 

with central stations, heavy overhead or small output, liability for 
breakdowns and similar handicaps are generally so pronounced that 
replacement of such plants by Central service is the most ad- 
visable course readily disclosed by a cost analysis. Yet a serious 
limitation inherent in the very nature of ordinary cost keeping 



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Kw.-hr. per Month , Thousands - 

Fio. 129. — Comparison of Costs of Purchased and Generated Power 

In a small plant at the passenger station requiring practically no heat a distinct 
advantage was secured by purchasing electricity for illumination. (Actual 
record.) 



becomes in such cases glaringly apparent. Unless it is known 
that the expenses were as low as they could be under best 
managerial methods, the comparison of electric service rates 
with mere cost records is liable to cause a very serious loss. 
By way of illustration let us examine Figure 128. 

A New England public utility company offered to replace 
an isolated plant service by purchased energy. Their report 



389 

showed $750 saving a month over the poor record of the iso- 
lated plant. When, however, the method of management and 
the operating practice of this isolated plant were modernized 
along the lines advocated by us, the central service, if ac- 
cepted, would have meant an annual loss of about $18,000. Not less 
common example may be found in the case of an isolated light- 
ing plant in Boston where considerable efforts have been spent 
to improve the operating economy and reduce the expenses. 
Eight months operation disclosed that with 15,000 kilowatt hours 
monthly output the expenses per kilowatt hour were 6.5 cents 
and with 30,000 kilowatt output about 3.8 cents whereas these 
quantities of energy could have, been purchased from the pub- 
lic utility company in the first5histance at 3.86 cents per kilowatt 
hour and in the second at 2.74 cents per kilowatt hour. On the 
average consumption a saving thus appeared to be 1.43 cents per 
kilowatt hour or $3,500 per year. The relations between rates, 
unit costs, monthly expenses and consumption are shown in 
Figure 129. 

Again, in cases of a parallel operation of the isolated plant 
with the public utility supply many specific problems will arise. 
They may be pointed out by a cost accountant but explanations 
and remedies should be sought from engineering research. The 
four column tabulation that follows, illustrates a typical situa- 
tion developing in the plant of a transportation company during 
the month when public service current was switched into 
their lines. The first line represents expenses for independent 
operation during the first part of the month and the second 
line the expenses of generating the balance of one's own cur- 
rent during the parallel operation. The summary and the aver- 
age for the whole month shows clearly the effects. 



Independent Operation 


Labor 


Material 


Total 


Unit Cos: 


1. From 1st till 20th 


Dollars 
3912.55 
2363.60 
6276.15 


Dollars 

223,739.35 

11,135.60 

34,874.95 


Dollars 
27,651.90 
13,499.20 
41,151.10 


Cents 
0.42599 


2. During 20th to 31st 


0.56494* 


3. Entire month, average 


0.46339 



* During this period the plant was operating in parallel with the public utility central station 
from which the 1,51 1 ,200 kilowatt hour, were purchased during these ten days. 

More light may be thrown on this situation by Figure 130. 
The thermal efficiency of the plant due to decreased demand 



39o 

and poorer machine factor has dropped from an average 
of 9.2 per cent to 7.1 per cent, indicating an increase in 
coal consumption per kilowatt hour of 0.8 pound or nearly 
3,000 more tons of coal per month. To offset this loss not finan- 
cially but economically is an impossibility for a central station 
service as no power house can generate one kilowatt hour of 
energy on 0.3 pound of coal." 1 

From the above examples we are now warranted in drawing 
a conclusion : all financial statements and cost accounts in order 
to be of help to improve the conservation of natural resources 
and to increase the productive efficiency must be prepared or 
at least scrutinized and digested by an expert in economic pro- 
duction, that is, a specially trained engineer. Similarly in cases 
of contemplated discontinuation of an inefficient isolated plant, 
of the purchase of power from outside, of a parallel operation 
and so forth, it is the task of the engineer to find : 

1 Whether existing mode of plant operation cannot be 

improved and what is the possible ultimate economy 
of it 

2 What effect the substitution or parallel operation will 

produce on (a) expenses and (b) national fuel economy 

3 What results may be expected from a change on service, 

on men, on the community, etc. 

This obviously involves besides other studies and tests a very 
careful examination of the terms of the proposed contract for 
the purchase of power. By way of illustration we represent 
graphically in Figure 130 the terms of a large power contract 
(40,000,000 kilowatt hour per year minimum) as described sev- 
eral years ago in many technical papers 13a thus : "The contract 
under which power is supplied to the railroad provides for prim- 
ary and secondary charges the maximum demand is 65,000 kilo- 
watt with a minimum load factor at this demand 70 per cent; a 
minimum power factor for single phase service except momen- 
tarily 70 per cent. For loads above the minimum demand 
the limit of load factor is 50 per cent, etc." How uniform is the 
final billing charge per kilowatt hour consumed, due to the 
various stipulations of this contract, is apparent from our dia- 
gram, though in a mere reading of the contract an impression 
may be gained that the scale of rates is sliding and other ad- 
vantages offered. 



Annual Bill j n H undre d Thousand Doll 




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u o n 



-i- 



Chapter XI 

POWER AS A COMMODITY 

THE success or failure in mastering power production determines 
the future of society, the rise and fall of nations, the form, 
order and ideals of our relations. Upon those who are called to 
organize, plan, direct, and control production, depends whether waste- 
fulness, idleness, and friction shall ruin such a state of affairs, or 
efficiency, industry, and cooperation lead us to a higher form of social 
order. Which way will be chosen in this or that case is not a matter 
of free choice, but an inevitable resultant of an interplay of a large 
number of social and economic forces. Those who are clearly gain- 
ing in the game of the destruction of natural resources, benefiting by 
idleness, and unable to foresee the outcome of the dissipation of human 
resources through a low standard of life and its corresponding ills — 
will, by the sheer logic of facts cling to and support privileges and 
competition. So long as the control of production rests in their 
hands, it is nojt the fact of the destruction of human and natural re- 
sources, but the figures of the ledger account that determine their 
attitude toward the conservation of life, fuel, material, and time. 

Again, those industrial leaders who have enough foresight, either 
intuitive or based on a study of economic facts and tendencies, to get 
a clear vision, or who for reasons of patriotism or in anticipation of 
future advantages, are ready to denounce the unrestrained scramble 
for individual gain at whosesoever and whatever expense, come out 
strongly in favor of cooperation and the abolition of special privileges, 
and wisely practice efficiency on a plan broader than any one plant, 
any one branch of industry, or even any one state. Their method of 
mastering production is thus permeated by the democratic spirit — 
since it is guided from without and based on facts forming the founda- 
tion of the economic structure of society — cooperation. 

Having described in the preceding chapters a method of mastering 
power production based on the application of science to a democrati- 
cally conducted industry we shall now attempt to appraise in general 
the effects of securing in this manner an adequate and cheap supply 
of power, produced with the greatest economy in fuel and human 
energy. 

Ancient Greek civilization was sustained by the servile Helots, each 

391 



392 

family having on an average five Helots who supplied a great part 
of the Greek energy. The modern American family has at its service 
one hundred and fifty servants in the form of electrical, mechanical, 
and hydraulic energy harnesses to carry on the production of the 
necessities of our mode of living. To produce this amount of power, 
at least 150,000,000 horsepower must be generated, or in other words, 
to produce our average output of commodities, without the aid of 
power plants, the working population of the United States would 
have to be not less than three billion men. 

The prevalent imperfect methods of utilizing our power producing 
plants are at the same time appalling : an average small plant or steam 
locomotive makes use of only 5 per cent of the energy consumed while 
with a more perfect installation a three times greater return is possi- 
ble; with our crude, unscientific, and haphazard management we 
fail to utilize more than probably 60 per cent of the energy delivered 
from the existing equipment. To-day an American worker has, on 
an average nearly two horsepower available to aid his production, 
almost twice as much as the working man of Great Britain; an 
American miner produces two or three times as much coal as does 
his English fellow, yet our lead in standard rates of wages, average 
purchasing power of an individual and productivity as indexed by 
the cost of the necessities of life is proportionally small, for the 
two horsepower installed does not deliver all the power it can, for out 
of a ton of coal 800 pounds are wasted in the plant, some unneces- 
sarily consumed by the railroad hauling it to the plant, and only 
an insignificant amount of the by-product is recovered and a financial 
burden accumulates on the lavishly installed but only partially utilized 
power generating equipment. On the basis of the prices prevailing 
in 1915, the loss, which could be made available under the present 
state of technical knowledge and recoverable under a constructive 
economic policy, is estimated by the Smithsonian Institute (Bulletin 
102, vol. 1) at $2,000,000,000 annually. Correcting this figure for 
present prices and adding the losses due to needless bulk transporta- 
tion, poor methods of management, and wasteful utilization of devel- 
oped power we arrive at a figure approximating six billions of dollars 
per year, meaning a loss of $60 per capita. 

In this sense the manufacture of power is a most fundamental 
industry and one upon which the whole economic structure of our 
civilization depends. The problems related to better management 
of power production are paramount in importance to any other 
single industrial problem, while the product — energy — becomes the 
basic commodity indispensable to the existence of modern society. 




Fig. 131. — Man-Power Development Applied to Irrigation 

In Japan even to-day this practice is in vogue. This form of power is strictly- 
localized and limited to operator. 




Fig. 132. — Primitive Water-Power Development 

Together with wind mills, water wheels are the first conquest of man's brain 
power over the free energy in nature. Mechanical power developed is also 
utilized locally. 



393 



Historical Review 

The advent of power as the most potent factor of the cultural 
development of a people must be briefly reviewed before the imme- 
diate problems and future aims can be clearly grasped and construc- 
tive efforts properly directed. 

The history of the progress of mankind from the Promethean 
fire and arts of Hephaestos, down to modern industry, is the story 
of the development of power and its application to man's use. 
Through the ages up to the eighteenth century, stretched the period 
of the primitive knowledge and use of power. This period, of wind 
and water, is marked by the limited, local and individual character of 
its industries. (See Figures 131 and 132.) 

When men learned to liberate the energies of coal and use the 
power of steam as a motive force, the old world order passed away 
and the so-called "industrial revolution," a hundred years ago, 
ushered in the formative period of modern industry and the new 
world order dawned. 

The use of steam, freed power from geographic restrictions in- 
herent in hydraulic power, opened the coal fields and the oil wells, 
and created and developed transportation and industry as they are 
to-day. 

The United States consumes over one-half of the world's oil 
production and 52 per cent of the total output of coal — two-thirds 
of that coal being used for power production, and the remaining 
one-third for coke, domestic use, etc. Coal forms one-third of the 
total freight hauled in the United States and more than one million 
men are engaged in mining coal and oil. 

The present industry has been developed on the basis of the 
distributive use of coal. Although the possible expansion of industry 
is unlimited, the means of bringing to it energy in the material form 
of coal requiring a relatively enormous and superfluous bulk, has 
well nigh reached the limit of transportation capacity, and as only 
6 per cent, in rare cases as much as 15 per cent, of the energy con- 
tained in coal is available from the fuel, a fuller and more complete 
utilization of coal has become imperative. This situation signals 
practically the end of the formative period of industry, and the open- 
ing of the reign of the new motive force — electricity. (See Figures 
133, 134 and 135.) 

Electricity, virtually energy itself, not locked up in ponderous 
matter, has the capacity to work freed from substantial form, devoid 
of bulk, practically abolishing time in its transmission, and to a great 



394 

extent distance, capable of subdivision and distribution, easy of 
application and adaptable to a vast range of utilization. 

All of these capacities and characteristics make it possible to 
measure, buy, sell, distribute and use ' 'energy," whereby "power" 
takes its place as a commodity. With the coming in of this com- 
modity human industry in all its branches entered the era of un- 
limited possibilities. 

Electricity which as a motive power was first applied to portable 
machinery and the locomotive has become the driver in numberless 
devices : in mines, for pumps, ventilators, coal-cutters, drills, crushers, 
hoisting machines, transportation, etc. ; in the iron and steel industry, 
for the refining of steel and iron, making steel directly from the ore, 
welding, cutting metal, etc., the electric motor replacing more and 
more the steam engine, in textile mills, flour mills, pulp and paper 
mills and mills of every kind. It is gradually replacing steam because 
of the greater safety and ease of handling on the farm not only for 
tractors and other machinery and irrigation, but as a stimulant for 
increasing the crops — a usage of electricity that has been the subject 
of a considerable study, nitrogen fertilizers obtained by fixing the 
nitrogen of the air by electricity ; its limitless potentialities in electro- 
chemistry ; its magic use in communication ; its use in transportation ; 
in short, though electricity, within the brief period of its advent 
as a practical factor, has been put to such varied and extended 
usages, the incalculable realm and scope of its application are but 
just beginning to be grasped. Table 1 showing the horsepower 
used per wage earner in various industries of the United States 
during 1914 illustrates the intensity and the extent of power appli- 
cation. The following figures, covering the development of central 
power stations in the United States, also show the rapid increase in 
the use of electric energy in the form of power and light. 

The electric energy generated for sale in 1907 was 10,621,407,000 
kilowatt hours; in 1912, 17,585,622,000 kilowatt hours; and in 1917 
it was about 27,000,000,000 kilowatt hours, which shows an increase 
of 155 per cent over the production in 1907. Figure 136 illustrates 
the growing consumption of electrical energy in the United States in 
recent years. 

The figures published by the United States Bureau of Statistics 
for 1917 are for central light and power stations. The number of 
central stations was 6541, of which 4224 were commercial and 2317 
municipal. These had a total primary horsepower of 12,857,998 
(8,389,398 steam engines, 217,186 internal combustion engines, 
4,251,423 water-wheels) with a dynamo capacity of 9,001,872 kilo- 



395 



TABLE I— HORSE-POWER USED PER WAGE EARNER IN VARIOUS 

INDUSTRIES DURING 1914 



Agricultural implements 

Artificial stone products 

Automobile and bodies 

Boots and shoes, including cut stock 
and findings 

Boots and shoes from rubber 

Boxes (fancy and paper) 

Brass, bronze and copper products 

Bread, bakery 

Brick, tiles and pottery 

Butter, cheese, and condensed milk . . . 

Buttons 

Canning and preserving 

Carpets and rugs 

Carriages and wagons 

Cars and general shop construction 
(electric railroads) 

Cars and general shop construction 
(steam railroads) 

Cars, steam railroad, not included above 

Cement 

Chemicals 

Clocks and watches 

Clothing, men's 

Clothing, women's 

Coke, not including gas-house coke . . 

Confectionery 

Copper and tinsheeting 

Cordage and twine , 

Corsets -..'.. 

Cotton goods 

Cutlery and tools 

Dyeing and finishing 

Fancy articles 

Fertilizers 

Firearms and ammunition 

Flour mills and grist mills 

Food preparations 

Foundry and machine-shop products . 
Furniture and refrigerators 



Number 

of 

Wage 

Earners 



48,459 
10,255 

127,092 

/ 

206,088 
18,687 
45,311 
40,306 
124,052 
127,444 
23,059 
14,511 
74,071 
31,309 
52,391 

26,384 

339,518 
54,288 
27,916 

4 32,311 
23,328 

225,719 

168,907 
21,107 
53,658 
80,029 
27,326 
20,496 

393,404 
33,427 
48,467 
10,967 
22,815 
18,557 
39,718 
20,306 

564,610 

133,498 



Total 

Primary 

Power, 

HP. 



121,428 

20,326 

173,684 

112,929 

24,621 

38,179 

122,700 

107,771 

470,758 

130,862 

14,398 

120,004 

29,486 

112,549 

44,989 

433,994 

126,687 

490,402 

282,385 

15,647 

53,281 

28,396 

120,327 

55,823 

75,263 

93,937 

7,057 

1,585,953 

73,255 

130,172 

8,005 

114,281 

18,828 

822,384 

80,022 

1,129,768 

251,997 



Horse- 
power 

per 
$1,000 

of 
Prod- 
uct 



0.73 
0.92 
0.26 

0.19 
0.45 
0.51 
0.75 
0.21 
2.53 
0.35 
0.69 
0.79 
0.42 
0.78 

1.16 

0.82 
0.65 

4.81 

1.52 

0.48 

0.11 

0.05 

1.21 

0.32 

0.79 

1.57 

0.17 

2.29 

2.86 

1.19 

0.45 

0.74 

0.45 

0.93 

0.36 

0.82 

0.89 



Total Power 

per Wage 

Earner 



Pri- 
mary, 
HP. 



2.5 
1.9 
1.4 

0.5 
1.3 
0.8 
3.0 
0.9 
3.7 
5.7 
1.0 
1.6 
0.9 
2.1 

1.7 

1.3 
2.3 
17.5 
8.7 
0.6 
0.2 
0.2 
5.7 
1.0 
0.9 
3.4 
0.3 
4.0 
2.2 
2.7 
0.7 
5.0 
1.0 



Elec- 
trical, 
HP. 



20. 
3. 
2. 
1. 



1.7 
0.6 
1.0 

0.3 
0.3 
0.5 
1.6 
0.6 
0.7 
1.0 
0.3 
0.4 
0.8 
0.9 

1.7 

0.9 
2.1 
12.0 
5.3 
0.4 
0.1 
0.1 
4.2 
0.7 
0.6 
1.2 
0.2 
1.3 
1.0 
1.0 
0.2 
2.8 
0.9 
3.7 
2.3 
1.5 
0.6 



39^ 



HORSE-POWER USED PER WAGE EARNER IN VARIOUS 
INDUSTRIES DURING 1914— Continued 



Number 

of 

Wage 

Earners 



Gas illuminating 

Glass 

Gloves, leather 

Hats 

Hosiery, knit goods 

Ice 

Iron and steel, blast furnaces . 
Iron and steel, rolling mills . . 
Iron and steel, bolts and nuts 

Iron and steel, forgings 

Jewelry 

Leather, tanned 

Lime 

Lumber products 

Marble and stone 

Mattresses 

Millinery 

Mineral waters 

Musical instruments 

Oil, cottonseed cake 

Paint and varnish 

Paper, wood pulp 

Patent medicines 

Paving materials 

Petroleum 

Rubber goods 

Sewing machines 

Shipbuilding 

Silk goods 

Slaughtering 

Smelting and refining copper. 

Soap 

Stoves and furnaces 

Sugar refining 

Tobacco 

Turpentine 

Typewriters 

Wire 

Wire work 

Wood 

Woolen goods 



43,792 
74,502 
10,668 
21,318 

150,520 
23,011 
29,356 

248,716 
10,658 
10,689 
28,289 
55,456 
12,429 

618,163 
54,981 
11,747 
45,274 
15,506 
37,556 
21,810 
16,083 
88,457 
25,502 
19,540 
25,366 
50,220 
18,007 
44,489 

108,170 

101,076 
17,731 
14,172 
37,325 
11,253 

178,872 
34,817 
11,091 
17,600 
12,126 
11,615 

163,976 



Total 
Primary 
Power, 

HP. 



245,715 

163,139 

3,357 

20,851 

125,842 

461,988 

1,222,273 

2,706,553 

28,897 

38,215 

15,666 

122,712 

39,134 

2,796,902 

207,461 

21,674 

12,736 

25,164 

44,349 

249,781 

70,611 

1,621,154 

28,872 

138,026 

128,468 

151,927 

24,229 

115,333 

116,924 

260,996 

194,980 

35,737 

49,150 

49,666 

38,737 

2,478 

10,887 

83,940 

21,547 

43,334 

398,367 



Horse- 
power 

per 
$1,000 

of 
Prod- 
uct 



1.11 
1.33 
1.15 
0.55 
0.48 
7.64 
3.84 
2.94 
1.23 
1.13 
1.19 
0.47 
2.12 
2.78 
1.93 
0.55 
0.11 
0.43 
0.47 
1.17 
0.48 
4.88 
0.28 
3.58 
0.32 
0.67 
0.88 
1.30 
0.46 
0.15 
0.44 
0.27 
0.54 
0.17 
0.07 
0.11 
0.44 
1.02 
0.51 
2.27 
1.01 



Total Power 

per Wage 

Earner 



Pri- 
mary, 
HP. 



5.6 

2.1 
0.3 
0.9 
0.8 
20.0 
41.6 
10.9 
2.7 
3.5 
0.5 
2.2 
3.1 
4.5 
3.7 
1.8 





1 

1 

11 



4.4 

18.3 

1.1 



Elec- 
trical, 
H.P. 



2.6 

1.0 
2.6 
10.9 
2.5 
1.3 
4.4 
0.2 
0.07 
0.9 
4.8 
1.7 
3.7 
2.4 



0.9 
1.2 
0.1 
0.4 
0.3 
2.2 
7.2 
4.8 
1.7 
2.3 
0.4 
1.3 
1.0 
0.5 
1.7 



1.0 
1.4 
0.4 
1.2 
4.9 
1.2 
0.8 
2.1 
0.1 
0.0 
0.6 
2.2 
1.1 
0.4 
0.8 



VjI 



watts and a station output of 2; 1,417 kilowatt The 

number of stationary motor, served was 554,817 with a total of 
9,266,323 horsepower, 236,838 being lamps and 1,389,882 incan- 
descent lamps. 

A number of electric traction companies, 1,311, operating 
44,811.53 miles of single tracks, consumed 12,187,850,^31 kilowatt 
hours of which 4,947,348,042 kilowatt hours were purchased 
7,240,501,789 were generated by the railroads themselves with a 
dynamo capacity of 2,928,454 kilowatts and 4,2(/j, 192 primary power 
(3,543,915 steam, 28,294 internal combustion, oil and and 

629,983 water power;. 

The census of manufactures for 1914 gives the following figures 
concerning the use of primary power, the use of electric power, and 
the degree of electrification of the manufacturing industry in per 
cents of the total primary power : 



Industry 



Degree of Electrification of Manufacturing Industries 



Primary 
Po?7er 



Electric 
Power 

Engtalla- 

tion 



Electric 

Operated 

by 

?-:r;':..z.:^'': 
Current 



In Per Cent of 

Primary Power 



Current 
Generated 

:r. Kan: 



Un- 

ekctriried 

Primary 



1. Iron and steel. . 

2. Lumber 

3. Textiles 

4. Paper 

5. Food 

6. Miscellaneous. . . 

7. Chemicals 

8. Stone, glass, clay 

9. Non-ferrous 

metals j 

10. Liquors [ 

11. Railroad repair 

shops 

1Z Vehicles j 

13. Leather [ 

14. Tobacco 



5,544,542 
3,240,411 
2,73 7 

•,616 

•3,376 

1,49, ,-. 

57: 
575,769 

47; 

454,917 
317,887 

3£.-'- 



Total I 22,54' "74 



2,65 : 
448,511 
995,637 
67! 

:,39i 

811 

-: ;- 1 

675,642 

.153 
15: 

:.724 
327,705 

15: 

21 



:.142 



14.2 

7.2 

16.5 

20.2 

:;- o 

22.0 
22.7 
24.2 

26.5 

29.1 
39.5 
22.6 

30.4 



17.4 (over) 



13 f 

6.8 
1$ 9 

12.5 
13.2 
29.8 
M I 

21.0 

19.3 

40.0 
32.5 
25.2 
25.3 



21.9 (over) 



52.2 
H 2 
63.6 
67.3 
67.8 
4< 2 

54.8 

44.4 
70.7 

22.9 
28.0 
52.2 
44.1 



60.7 



398 

Electric energy is generated either by the use of fuels or by 
waterpower, and in accordance with the source it is designated as 
either carboelectric power or hydroelectric power. At present the 
hydro-electric power production is equal to the use of about 40,000,- 
000 tons of coal, whereas over 400,000,000 tons are yearly consumed 
to produce steam power and carboelectric power (27,000,000 tons 
for the latter). 

The following table taken from The Energy Resources of the 
United States (Bulletin 102, vol. 1, Smithsonian Institute), shows 
the distribution of potential water power, of unmined coal and 
tapped oil, in percentage of the total resources in the United States, 
with special regard to sections lacking in coal. 



States 


Water- 
power, 
Poten- 
tial, % 


Coal Reserve, 
Unmined 


Oil 

Reserve 

Un- 
tapped 

% 


Maine, Vermont, New Hampshire, 
Massachusetts, Rhode Island, 
Connecticut 

Delaware, Virginia, Maryland, South 
Carolina, Georgia, Florida 

Arizona, New Mexico, Texas, Ar- 
kansas, Oklahoma, Louisiana.... 

California, Oregon, Washington. . . 

Other States of the Union 


3 
6 

6 

43 
42 


none 

1% (Va. and Maryland) 

4 %( Texas & Oaklahoma) 

2% (Washington) 

93% 


none 

none 

52 
31 
17 



The total water-power developed at present in the United States 
amounts to about 6,000,000 horsepower of which about 4,500,000 
is commercial power. The potential water-power is estimated at 
about 200,000,000 horsepower of which about 20,000,000 is capable 
of immediate development. Fifty million of the above mentioned 
total potential water-power could be used without special provisions 
for storage. About 10 per cent of the ready available water-power, 
and 3 per cent of the total open to development under elaborate ar- 
rangements for water sotrage has been developed. 

It is estimated that the water-power readily available in the 
United States if converted into electric energy is more than capable 
of turning every industrial wheel and illuminating every street and 
building throughout the republic. 




Fig. 133. — An Example of a Thermal Power Plant 

A typical European central station with adjoining workingmen's barracks on 
the right, offices on the left and fuel yard in the foreground. 




Fig. 134. — An Example of Electric Distributing Substation 
A Typical European substation feeding two-phase current to electric railroad. 



399 

The figures showing the production of coal and coke, and the 
current generated by steam in the various States of the United 
States form an interesting comparison, which may be seen in the 
Tables II and III. 



TABLE II 
PRODUCTION OF COAL AND COKE IN 1916, IN SHORT TONS 



Coal 



Coke 



Alabama 

Arkansas ..J 

California 

Colorado 

Georgia 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Missouri 

Montana 

New Mexico 

North Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania (bituminous) 

Pennsylvania (anthracite) 

South Dakota 

Tennessee 

Texas 

Utah 

Virginia 

Washington 

West Virginia 

Wyoming 



16,250,000 

2,000,000 

12,000 

10,260,948 
140,000 

63,500,000 

18,738,256 
7,600,000 
8,000,000 

25,106,500 
4,930,000 

1,056,393 

4,000,000 

3,688,307 

3,893,185 

620,000 

30,500,000 

3,053,543 

39,230 

170,270,000 

88,312,000 

14,000 

6,589,915 

2,300,000 

3,621,935 

9,300,000 

3,000,000 

87,989,000 

7,650,000 



4,250,000 



1,320,000 

25,000 

2,500,000 

3,100,000 



980,000 
395,000 
600,000 

250,000 



479,153 
725,000 



30,746,000 



275,000 

224,294 

700,000 

140,000 

1,900,000 

2,300,000 



582,435,212 



50,909,447 



In the other set of data recently compiled by the United States 
Geological Survey for January, 1920, we see the relation of the 
output by Hydroelectric and carboelectric plants (see Table IV), 
and the quantities and kinds of fuels consumed in the production. 
(See Table V.) 



400 



TABLE III— CURRENT GENERATED BY STEAM AND SHORT TONS 

OF COAL BURNED BY STATES 



1917 



Kw-Hr. 


Coal 


202,000,000 


303,000 


8,000,000 


12,000 


63,000,000 


95,000 


316,000,000 


474,000 


179,000,000 


268,000 


39,000,000 


59,000 


179,000,000 


268,000 


78,000,000 


117,000 


116,000,000 


174,000 


2,070,00,000 


3,105,000 


700,000,000 


1,050,000 


185,000,000 


278,000 


142,000,000 


213,000 


229,000,000 


343,000 


163,000,000 


245,000 


100,000,000 


150,000 


358,000,000 


537,000 


1,200,000,000 


1,800,000 


329,000,000 


493,000 


232,000,000 


348,000 


58,000,000 


87,000 


772,000,000 


1,158,000 


17,000,000 


26,000 


147,000,000 


220,000 


62,000,000 


93,000 


640,000,000 


960,000 


9,000,000 


14,000 


3,350,000,000 


5,025,000 


50,000,000 


75,000 


19,000,000 


29,000 


1,459,000,000 


2,188,000 


100,000,000 


150,000 


293,000,000 


439,000 


1,895,000,000 


2,843,000 


191,000,000 


286,000 


60,000,000 


90,000 


10,000,000 


15,000 


158,000,000 


237,000 


315,000,000 


473,000 


76,000,000 


114,000 


31,000,000 


46,000 


227,000,000 


340,000 


579,000,000 


869,000 


113,000,000 


169,000 


349,000,000 


524,000 


18,000,000 


27,000 



Alabama 

Arizona 

Arkansas 

California* 

Colorado 

Connecticut 

Delaware 

District of Columbia. 

Florida 

Georgia 

Idaho f 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada f 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina 

North Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode Island 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia , 

Washington , 

West Virginia , 

Wisconsin 

Wyoming 



♦ Coal consumption 
f Coal consumption 



for generating electric power is practically nothing, 
for generating electric power is negligible. 



TABLE IV— PRODUCTION OF ELECTRIC POWER AND CONSUMP- 
TION OF FUEL BY PUBLIC UTILITY POWER PLANTS IN THE 
UNITED STATES IN JANUARY, 1920 

Thousands of Kilowatt-Hours Produced 



State 



By 
Water Power 



By 

Fuels 



Alabama 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Dealware 

District of Columbia . 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts ...... 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina 

North Dakota 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode Island 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West Virginia 

Wisconsin 

Wyoming 



Total 

Total, by water power and fuels . 



34,864 

8,567 

132 

164,727 

12,784 

9,069 



965 
43,816 
48,574 
14,831 

2,943 
55,574 

1,741 



23,381 
284 
22,009 
51,799 
28,053 



5,720 

89,574 

909 

3,416 

4,322 

143 

53 

227,033 

53,035 

\ 1,490 

217 
32,278 
45,324 

355 
61,911 

477 

39,443 

74 

13,932 

15,430 

13,801 

103,981 

1,775 

35,443 

152 



1,274,401 



14,452 

11,703 

7,675 

112,346 

22,811 

59,256 

6,807 

23,317 

10,890 

10,696 

1,348 

260,723 

91,788 

31,622 

35,986 

23,409 

18,126 

1,577 

31,261 

147,936 

138,180 

36,157 

5,886 

54,082 

562 

20,436 

119 

5,166 

101,478 

1,524 

382,108 

10,956 

2,732 

258,432 

17,287 

7,845 

329,392 

37,114 

5,825 

3,327 

9,233 

55,397 



786 
30,423 

4,480 
95,306 
37,451 

4,785 



2,580,198 
3,854,599 



Authority: Division of Power Resources, U. S. Geological Survey. 



402 

How insignificant is as yet the development of public utility 
service may be conceived from the fact that during 1919 only 7.6 
per cent of total bituminous coal produced in the country was used in 
central stations, or about 35,000,000 tons out of nearly 460,000,000 
tons produced. 

As it has been stated before, the power production in this country 
— steam and carboelectric power together — consumes nearly 400,- 
000,000 tons per annum. 12 * The moving of this quantity requires 
about 10,000,000 car loads at 40 ton car capacity. In 1917 there 
were in the United States 950,000 coal cars in use. In addition there 
was also to be moved about 160,000,000 tons of coal for house- 
heating and coke making purposes, the transportation of which 
requires another 4,000,000 cars. 

In March, 1918, C. E. Stuart, of the Utilities section of the Con- 
servation Division, U. S. Fuel Administration said : "The individual- 
istic way in which fuel is now consumed in cities is not efficient. A 
ton of coal burned in a large central station will produce at least 
four times as much electric power as if burned in the average small 
plant. . . . There are localities in the country where there is an 
excess of hydroelectric energy and where there are at the same time 
coal-burning central stations. The saving that could be effected by 
shutting down the coal consuming plants . . . is evident. . . . 
the hydroelectric plants would carry the load of the coal consuming 
plants . . ." 

If it takes 15 tons of coal to generate one electrical horsepower 
per annum, then the 20,000,000 horsepower of water-power at 
present not used but economically immediately available for the 
generation of electric power, represent about 300,000,000 tons of 
coal, which could be saved thereby, relieving the means of trans- 
portation, which would then not be taxed above their capacity and 
not less than 132,000,000 tons at the rate allowed for the present 
development, will not have to be transported. 

In spite of the growing use of electricity, practically no change 
has been effected in the basic inefficient conversion of coal into 
available energy and only a small fraction of the available water- 
power has been developed, although electricity has rehabilitated the 
use of water power, making available for generating purposes both 
sources of power : coal and water. Yet in this competition it would 
appear that fuel is the winner. 

The public utilities corporations may not see the use of an extra 
effort to develop special water-power sources, even if ultimately the 
power generation proves to be cheaper, as cheaper power production 




Fig. 135. — Electrified Railroad Line in Europe 
Coal problem in Italy is so acute that the railroads had to be electrified. 



TABLE V 

The production of the electric power shown in Table IV required the com- 
bustion of fuels in the quantities indicated in the following table: 



State 



Alabama 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

District of Columbia. 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina 

North Dakota 

Ohio 



Oklahoma 

Oregon 

Pennsylvania. . 
Rhode Island. . 
South Carolina. 
South Dakota . . 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West Virginia. . 

Wisconsin 

Wyoming 



Coal, 
Short Tons 



29,211 

198 

8,675 

43,345 

77,311 

9,139 

23,237 

2,425 

21,179 

150 

411,719 

205,453 

94,185 

39,710 

45,149 

7,589 

3,410 

39,552 

173,088 

180,542 

64,060 

14,028 

91,997 

4,206 

37,926 

367 

6,768 

156,280 

4,733 

478,533 

21,992 

19,362 

401,066 

8,353 

190 

532,761 

35,196 

11,779 

7,729 

22,729 

58,707 

3 

1,748 

43,212 

10,396 

106,230 

64,626 

14,418 



Petroleum 

and 

Derivatives, 

Barrels 



Total I 3,634,662 

(a) Artificial gas. 



1,255 

42,473 

4,888 

545,829 

110 

4,374 



54,753 

19,605 

10 

472 

254 

576 

91,428 
188 

60,528 
49 

1,764 

139 

620 

11,841 

90,657 

22 

16,503 

842 

136 

866 

763 

34 

150x 

697 

71,940 

3,657 

5 

7,560 

1,936 

25 

211,222 

2,146 

132 

15,612 

50 

544 

4,217 



1,270,872 



Natural 

Gas, 

Thousands 

of Cubic Feet 



155,222 ] 
179,563 



10,236a 



2,025 
76,283 



68,510 
1,500 



1,257 



1 



280a] 
72,579 



161,0656 
275,926 

49,937 



48,227 

227,900 
3,300 



1,333,810 



(6) Includes 61,520 artificial gas. 



404 

would cause them to impose upon the public utilities a correspondingly 
lower sales rate for power. The public can always be relied upon to 
pay any kind of rate price so long as the actual production is suffi- 
ciently high in cost to prevent the rate from appearing extortionate. 
This explains the fact that many public utilities, instead of using 2 
or 3 pounds of coal sufficient for the generation of one kilowatt 
hour burn as much as 10 pounds of coal for that purpose. Why 
then, they argue, lower the cost of production, as the gain in doing 
so would be only for the public at large — and the public does not 
count — a reasoning patent in frequent appeals to courts of justice for 
the protection of public rights, illustrated in the case of Covington 
and Lexington Turnpike Company vs. Sanford (164 U. S. 578), 
where the court said: "A corporation is not entitled as of right 
and without reference to the interests of the public, to realize a 
given percent upon its capital stock. Stockholders are not the only 
persons whose rights or interests are to be considered. The rights 
of the public are not to be ignored. The public cannot properly be 
subjected to unreasonable rates in order simply that stockholders 
may earn dividends." 

Nowhere is the situation better seen than in the rate schedules 
of many central stations, where the small (or residential) consumer 
has to bear the burden, special prices being made to large industrial 
consumers, — to discourage them from generating their own power. 
The large wholesale consumer is practically able to make his own 
terms, a position not enjoyed by the general public. 

Prospective Review 

For over twenty years a controversy has been going on in the 
United States between the advocates of central stations and those of 
private or isolated plants, as to the most economic means of power 
supply. The respective merits of each of .these systems have been 
put forward, certain salient points being acknowledged by both 
sides: that the central station or public utility field includes a host 
of establishments where the installation of isolated plants is not war- 
ranted ; that the localized private (isolated) power plant is an economic 
necessity in certain types of buildings and manufacturing establish- 
ments where heat is of prime importance and the power production 
only a by-product; and that between those two well denned groups 
there lies a great majority of buildings and manufacturing estab- 
lishments, which could be served by either or both of these methods 
of power supply. 



40$ 



O ° 

O.-r 

J5 



c — 

<u o 

0) 

o 

.o ■ - 



it5rr- 



100 



75 



2.5 



Z.Q 













i 














































EL 


?0 
EC 


W7 
TR 


'H 
IC 


0, 
AL 


■ 
c 




UT 


PL 


7 










































. 






































IN 


ZR 
RE 


EA 
'VI 


51 
:N 


■ C 
UE 


<fi- 


I 
















































































> O Z O ^ 

m o o uj 4 uj < o. 

t/) O Z O -3 



>: z 2 o 



12>!&. 



- - ^ H > (J 2 

1919. 



TABLE I— CENTRAL-STATION RETURNS FOR TWELVE MONTHS 





Per- 
cent- 
age of 

In- 
stalled 
Capac- 
ities 
Repre- 
sented 


Revenue from the Sale of 
Energy 


Per- 
cent- 
age of 

In- 
stalled 
Capac- 
ities 
Repre- 
sented 


Kw.-Hr. Output 




1919 
Thou- 
sands 


1918 
Thou- 
sands 


Per 
Cent 

In- 
crease 


1919 

Thousands 


1918 

Thousands 


Per 
Cent 

In- 
crease 


Mar. 

Apr. 

May 

June 

July 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

Jan. 
Feb. 


45 
45 
45 
47 
44 
54 
53 
55 
53 
59 

54 

*57 


$28,579 
27,740 
27.795 
28. 1 75 
25,794 
32,756 
32,344 
35,492 
37,439 
44,125 
1920 
44,531 
43.835 


$24,447 
23,919 
24,291 
24.701 
22,568 
29.006 
28.336 
30.077 
31,927 
37,978 
1919 
37.169 
36,020 


17.3 
16.0 
15.5 
14.1 
14.1 
13.0 
14.0 
18.0 
17.2 
16.0 

20.0 
22.8 


45 
45 
45 
47 
44 
54 
53 
60 
58 
65 

64 
67 


1,359.296 
1,279,274 
1.306,622 
1,399,951 
1,309,301 
1,801,836 
1,761,582 
2,175.636 
2.055.428 
2,509,571 

1920 
2,450.924 
2,395,065 


1.340,210 
1,240,782 
1,314.206 
1,367,908 
1,281,874 
1,793,706 
1,695,862 
1,987,004 
1,895,693 
2.270.833 

1919 
2.078.880 
1.920.428 


|0 
2.9 
—1.0 
2.3 
2.0 
0.5 
4.3 
9.0 
8.2 
10.0 

18.0 
24.1 



♦Includes estimates for twenty-five companies, representing 6.2 per cent of the 
total installed capacity of all central stations. 



Fig. 136. — Growing Consumption of Electrical Energy in U. S. A. 

Statistics of central stations indicate that even in post-war period the growth 
of electrical output is steady and rapid while the increase of revenue grows still 
faster. 



406 

This situation caused a third school to come forward and to 
advocate as a solution of the problem the making available of the 
commodity by a cooperation of central stations with isolated plants. 
To this school must be added the plan of a further utilization of 
the fuel by developing a central station service of heat and steam, 
which service in concurrence with gas, and electric current is in 
practice in some cities. 

However the advocates of a central station supply and those of 
private isolated plants, and those who would find a solution of the 
problem in a cooperation of these two supply methods, as well as 
those who propose a further utilization of fuel by a central station 
service of steam and heat, concern themselves only with coal 
or oil as direct fuel, forgetting that at best only 15 per cent and 
generally only about 6 per cent of the energy content of coal is 
transformed into the commodity — power. 

The two diagrams Figures 137 and 138 as prepared by Mr. 
Tryon of the U. S. Geological Survey, clearly illustrates both: 
purpose to which coal is used and staggering extent of losses 
sustained in its use, partly due to poor design of equipment and 
partly due to the neglect of the management to introduce better 
operating methods as set forth in the preceding chapters. 

The distributive generation of electric power — as was and had 
to be the case for steam power — was a practical procedure only so 
long as the use of electricity was small and restricted, but electric 
power is to-day a commodity increasing in demand. The issue 
therefore is that of a general power problem and not one of hydro- 
electric power or carboelectric power, or of central stations or 
isolated plants. Transmission lines of several hundred miles are 
common to-day and longer transmissions are being developed, hence 
the question is: whether it be more advantageous to transport gen- 
erated power, or to transport energy in bulk, that is, fuel to generate 
the power at or near the place of consumption. 

This question in itself indicates that the basis of the problem is 
economy in material and human effort, which requires the fullest 
utilization of the sources of energy. With units of the highest type 
and largest capacity little more than 15 per cent of the heat of the 
fuel can be converted into a salable product as power in the form 
of electric energy. Most installations however do not deliver half 
as much of the energy of the coal as a commercial product. 

Coal besides being energy in material and bulky form, is also 
the source of innumerable mineral products of great social value. 
More than one thousand coal products as vital to the community 



407 



Total 

(5,700 

pounds 



*«£ 



Oa 






— — ---~^\ 



Total 
1,320 
pounds A n 

AC 



*#**$£" 
«*&** 






\t 



tf 



c.W l 







•'>' 
'i«" 






*- rf>; 



• .vO 



/^OV 









,^" 



AVERAGE\ 

practice; 



/ BEST 
(PRACTICE 



AS COMPARED WIJH ■ 

Fig. 137. — Average and Best Practice in Coal Utilization 



To develop 1,000 horsepower hours, a theoretically perfect steam engine and 
boiler would require about 600 pounds of coal. Actually under ordinary practice- 
we mine or destroy perhaps 15,700 pounds of coal in the seam in order to develop 
the 600 pounds worth of energy. The best practice does the same work with 
about 1 ,320 pounds of coal. In other words, the best practice uses only a tenth or 
a twelfth as much as the average. 

Of this only about 200 pounds is finally converted into mechanical energy. 

Data from Bureau of Mines and Super-Power Survey. 



408 

as fuel are to-day in use. The full utilization of the whole range 
of values, including energy, to-day still transported in the form of 
coal, imposes itself in the near future. This utilization, at present 
confined to the coke and gas industry which can still be described by 
the term of "by-product production' ' as it takes only half the field, 
must broaden itself and become an economic force covered by the 
term of "multiple production." There lies the future and the only 
great future. 

The meaning of multiple production becomes apparent when it 
is remembered that one ton of bituminous coal gives on the average 
10,000 cubic feet of illuminating (or fuel) gas, 20 pounds of am- 
monium sulphate, 2^2 gallons of benzol and Sj4 gallons of tar, 
which represent only the primary products, while other chemicals, 
drugs, dyestufls, etc., could be extracted. 125 

In 1918 the price of one ton of bituminous coal, at the mine, 
was $1.32 yet the multiple products of the same ton of coal would 
have had a collective value of at least $16. The illuminating gas 
and the benzol are : one a perfect fuel and the other an equivalent 
of gasoline as motor-fuel. Multiple production will make both 
gas and benzol important sources of power. Moreover, with the 
advent of industrial alcohol as fuel we shall not forget that gasoline 
cannot be mixed with alcohol, while it can be mixed with benzol 
and such mixture of gasoline and benzol can be mixed with alcohol, 
offering an excellent fuel for internal combustion engines. Further- 
more, ammonium sulphate has great value both as an artificial fer- 
tilizer and as a source for the extraction of ammonia — serviceable 
for medicinal, refrigerating, cleaning, etc., purposes. Tar, as has 
been pointed out is not only road building and waterproofing material, 
but primarily is a basis of great coal-tar industry, one that gave 
Germany its industrial supremacy and advantages at the beginning 
of the war. 

It has been estimated by the Fuel Administration that between 
10 and 25 per cent of steam coal is at present wasted under the 
boilers. About 400,000,000 tons of coal in the United States are 
used to generate power, half of which is used by industry" 8 and 
the other half is consumed by the transportation lines. Reckoning 
on the basis of only 12.5 per cent of saving unquestionably possible 
in every case merely by improved methods of management and 
operation of plants, intelligent mastery of power production will 
release for the country at least 50,000,000 tons of coal annually. 

In primary coal products it represents a loss of about 250,000,- 
000,000 cubic feet of gas, 500,000 tons of ammonium sulphate, 



409 

125,000,000 gallons of benzol, and 425,000,000 gallons of tar. In 
terms of cash the 50 million tons wasted in power production alone 
represent a price value of $200,000,000 at the colliery, while the 
multiple products value of this coal would be probably $1,200,000,000. 



Gas works 
/o tons 




Fig. 138. — What Becomes of our Coal — Disposition of the Miner's 

Yearly Output 

The average yearly output per man employed underground in America is 
about 1,000 net tons. The diagram shows the uses to which the 1,000 tons are 
put, including both anthracite and bituminous coal. 

Though the application of electricity has made headway, multiple 
production has not yet been considered for general adoption, its 
importance not yet having been grasped. Yet both are the most 
important economic forces of moulding influence on the present 
and future industrial order. The principle of multiple production 
as an economic force is bound to cause a revision in popularly 



4io 

accepted ideas of economics. Numerous plans are advocated offer- 
ing solutions of the industrial power problem. The most radical 
solution involving the principle of multiple production is perhaps 
the plan advocated by the British Coal Conservation Committee, of 
which the following is an abstract : — 

"The sub-committee of the Reconstruction Committee in Great 
Britain recommends that the present inefficient electric service sys- 
tem should be superseded by a comprehensive system divided into 
about sixteen districts, in each of which there should be one authority 
dealing with all generation and main distribution. Sites for electric 
generating purposes should be chosen on important waterways, out- 
side not inside of towns. Plans to be prepared to construct on these 
sites large super-power plants, capable: (1) of supplying energy 
to a comprehensive electric power distribution system. (2) of 
supplying electric energy at lowest possible price for all processes 
and manufacture. Such plants should be designed so that, as methods 
are perfected for extracting by-products from fuel before using it 
for the purpose of production of electrical energy, the by-product 
plant can be combined with the power plant. Power available from 
surplus gas or waste heat should be turned into electrical energy 
in local plants, which should feed into the main distributing system. 
Coal which does not warrant transportation away from the mine 
should be used at the spot for power generation. With a view to 
carrying out this policy a board of commissioners should be ap- 
pointed with the following powers: (a) to stop the extension or 
multiplication of uneconomical stations for public supply; (b) to 
arrange for the handing over on equitable terms of the generation, 
transmission, and main distributing system in each of the areas into 
which the country is to be divided; (c) to standardize for each 
area the frequency and voltage of the main transmission and dis- 
tribution systems; (d) to select for each area the authorities to 
work under adequate control as regards limitation of dividends, 
etc." 

Alternative types of electric organizations are described in an 
appendix. In reference to these alternative types the sub-committee 
emphasizes the need of initiative and resource in the management 
of electric service organizations and the freedom of range and 
keenness which are distinctive of a private enterprise, as such things 
are highly conducive to the best success. Such was the original 
outlines of a super-power central station plan based on coal as source 
of energy combined with the application of the principle of multiple 
production. 



4ii 

Recently Mr. C. M. Garland in the May 1920 issue of the Journal, 
American Institute of Electrical Engineers, reviewed the problems 
arising in this connection in America as follows: 'In the United 
States where at least 500,000,000 tons of bituminous coal are burned 
annually, there are 10,000,000,000 gallons of tar and the equivalent 
of 30,000,000,000 pounds of ammonium sulphate, having a com- 
bined value of $2,500,000,000 burnt up with the coal. It is not prac- 
ticable to save all of these by-products, but a recovery of 25 per cent 
could reasonably be expected when it is considered that 80 per cent 
of the coal mined is used by industrial plants, public-utility plants 
and the railroads. 

"The remarkable part of all qi this is that the means are at 
hand to-day and have been at hanxf for a number of years for carry- 
ing out the regional power development, the regional distribution of 
heat, the placing of every industrial load on the central station, 
the releiving of railroad congestion, particularly terminal conges- 
tion, through the reduction of the hauling of fuel, the reduction of 
the smoke nuisance in cities, and, in addition to these, the recovery 
of the by-products from at least 25 per cent of the coal mined. 

"I refer to the combination of the well-known Mond by-product 
system of gas generation with the low-temperature distillation of 
coal. 

"In the Mond process coal is gasified in a special producer 
whereby the coal is converted into gas, tar, and ammonia. The 
ammonia is recovered in the form of ammonium sulphate, which 
amounts to from 50 to 100 pounds per ton of coal gasified and has 
a value of about four cents per pound under present prices. The 
value of this by-product, therefore, varies from $2 to $4 per ton 
of coal gasified, depending upon the amount recovered. 

"The tar recovered from the straight Mond process represents 
about 6 per cent of the weight of the coal, and this tar consists prin- 
cipally of pitch which has little or no value. 

"The gas from the Mond process has a calorific value in the 
neighborhood of 140 B. t. u. per cubic foot and from 65 to 70 cubic 
feet of gas are obtained per pound of coal. This gas can be burned 
under boilers with greater efficiency than the coal and without smoke. 
It is also suitable for use in the firing of house-heating boilers and 
for small or large industrial furnaces. 

"This gas can be piped economically within a radius of fifteen 
miles of the central station. This distance limits the size of the 
central station and to a certain degree does not accomplish every- 
thing that could be desired from regional power and heat distribution. 



412 

It does, however, relieve railroad-terminal congestion, and it will 
in a large measure relieve main-line congestion, owing to the greater 
economy in the use of fuel and to the elimination of fuel hauled 
for the use of railroads." 

In Smith's process, the coal to be carbonized is first crushed 
and then delivered to primary retorts, where it is distilled at tem- 
peratures between 500 deg. to 900 deg. F. The result of this first 
distillation is a reduction of volatile contents of the coal to about 
8 per cent and a large yield of tar and gas of high B. t. u. value. 

This devolatilized coal is again ground, mixed with pitch ob- 
tained from tar recovered in the process, and briquetted. Briquettes 
are made subject to an additional distillation at a higher temperature 
of about 1800 deg. F., resulting in the production of carbo-coal and 
the recovery of by-products in far greater quantities than in ordi- 
nary by-product coke ovens. Clinchfield, Va., coal, in carbonizing 
1000 tons produced : 

1. Carbo-coal briquettes (over 13,000 B. t. u.) 725 tons 

2. Sulphate of ammonia 20,000 to 25,000 lbs. 

3. Other nitrogen products, pyridine bases up to 4,000 oz. 

4. Motor spirits (benzol, 250 gals. 

toluol, 500 gals. 

others, 1,000 gals.) 1,750 gals. 

5. Crude tar acids (cresylic) 4,040 " 

6. Water white naphthas 3,500 " 

7. Creosote oil 5,450 " 

8. Heavy creosote oil 4,660 " 

9. Surplus gas of about 530 B. t. u 2,000,000 cu. ft. 

The overloading of our railroad with coal, constituting over 30 
per cent of all rail freight is now responsible for the limitation of 
coal output from the mines, which according to the United States 
Geological Survey is in 1920 less than 50 per cent of the full-time 
output. Relief of the railroads is necessary, and the electrification 
of railroads offers a solution. Specific limitations however to a plan 
of steam-electric and hydroelectric super-power stations are seen 
in that. 

In the same article quoted above Mr. Garland writes: "In the 
central and northern portions of the United States every industrial 
plant from seven to eight months out of the year requires fuel 
for heating. In 75 per cent of these plants the fuel required for 
heating is more than sufficient to generate the power required for 
manufacturing operations. For practical purposes it may therefore 
be considered that the power is obtained during these months with- 



413 

out fuel expenditure. This explains why only 30 per cent of the 
industrial plants buy their power. Of this 30 per cent 20 per cent 
would doubtless be better ofl if they had efficiently operated plants 
and generated their own power. The writer is a strong advocate 
of central station development, but believes that it is well to recog- 
nize the limitations imposed by existent conditions." 

"The great barrier ... is therefore the fact that the average 
plant can take advantage of the increased economy of the central 
station only from four to five months out of the year. During the 
winter season the same amount of coal would have to be hauled to 
furnish heat in so far as the industrial plants are concerned. The 
amount of coal hauled would therefore be reduced only by the amount 
of coal saved by the electrification of the railroads which in this 
section would not amount to more than 20 per cent of the total. 
The writer, therefore, cannot see any great relief to railroad conges- 
tion unless some method of heating other than direct-coal firing is 
resorted to. It is also this coal for heating that leads to the over- 
crowding of railroad terminals during the winter months. Again, 
it is questionable if the poorer economy certain to result from the 
intermittent operation of boilers for the heating load in winter, 
assuming that the power load was taken by the central station, would 
not offset the saving effected through the electrification of the rail- 
roads. It is, therefore, quite certain that any regional power devel- 
opment that does not include also the distribution of heat will be 
extremely limited in its success, for with the present methods of 
electrical-power generation, it would never be possible to distribute 
electrical current for the heating of large areas. 

In the United States and elsewhere all plans which follow the 
idea of super-power stations and of multiple production, take into 
account the necessary development of available water-power as a 
source of energy for those regions lacking coal. In this connection 
it is not without interest to recall the recent argumentation advanced 
by Mr. Charles P. Steinmetz of the General Electric Company. As 
we have pointed out before, electricity, being a form of energy 
devoid of bulk and convenient for transmission, logically suggests 
the method of hydroelectric development. Instead of collecting and 
conveying a large mass of water, preserving its head by mechanical 
means and then generating electricity in a large and costly hydro- 
electric plant, from which the current is fed into a distributing net 
work of lines, generators with small hydraulic turbines should be 
distributed through the watershed. Hundreds of such small induc- 
tion generating stations then would feed into the system over collect- 



414 

ing lines and a large synchronous main station — steam turbine or 
hydraulic, or possibly even merely a synchronous motor station — 
would control the voltage and frequency of the system. 

To quote from Mr. Steinmetz' article in the General Electric 
Review, for 1919: "we collect the power of a watershed mechani- 
cally by elaborate hydraulic works, costing many times more than 
the most elaborate electric generating station, and then in a big 
unit convert the hydraulic, that is, mechanical power into electric 
power in a modern synchronous generating station. Or we burn 
millions of tons of coal under the steam boilers in our huge steam 
stations, extract 10 to 15, or possibly 20 per cent of its energy as 
electric power, and then pay for the condensing water to throw 
away the 80 odd remaining per cent of the heat energy of the fuel, 
while in numerous other furnaces we burn millions of tons of coal 
to produce heat, but waste the potential mechanical and electrical 
energy of this coal. 

"This is not a condition to make us proud of our industrial effi- 
ciency. But it came about naturally as the result of historical develop- 
ment. But the high cost of the hydraulic work makes such devel- 
opment economically feasible only where large amounts of water 
power are available in fairly concentrated form, and with the in- 
creasing development of such power sites, the number of water 
powers capable of development by our present methods is decreasing, 
while most of the country's potential water powers cannot be devel- 
oped by our present standard methods of hydroelectric generation, 
as the cost of the necessary hydraulic development, to collect the 
water power, is greater than the value of the power which may be 
collected. The only hope which can be seen for a more complete 
utilization of our country's hydraulic power, from the abandoned 
mill sites of New England to the mountain streams of the south 
and the west, thus lies in applying to the electric generation the 
same principles which have made the electric motor economically 
successful, that is, bringing the electric machine to the place of the 
power. That is, just as we place individual motors at every machine 
where mechanical power is required, and distribute the power to 
them electrically, so to place individual electric generators wherever 
along the water course hydraulic power is available, and collect the 
power of all these generators electrically." 

The universality of application of electric power from a little 
domestic grill or flat-iron to a huge steel furnace, from a sewing 
machine to an electric locomotive, from a wireless telephone to a 
synthetic food production, seems to so fully embrace the entire struc- 



4iS 

ture of modern life that a community without electricity sounds an 
absurd anachronism. Yet, considering the enormous wastes incurred 
in production and usages of power and gas we can not fail to see 
one outstanding fact : 

We need no new inventions, no new machinery to eliminate a 
fabulous proportion of losses incurred to-day due to lack of coor- 
dinated knowledge, cooperation and managerial ability, in short an 
intelligent mastering of power production for the benefit of the 
community is alone capable of conserving three-quarters of our 
power resources increasing the productive capacity and the wealth 
of the country almost beyond conception. 

I 

Sale of Power 

Electric plants were first established to furnish current for light, 
and the operating costs and the profits of the enterprises were borne 
by the consumers of light. But soon it was found that the plant 
could be operated cheaply during the day time, provided the light 
consumers continued to bear the burden of the operating costs, the 
sale of power generated during the day representing a net gain. 
This was the starting point of the methods of selling electric power. 
With the increased use of electric light and power and electric energy 
becoming a commodity, innumerable systems of determining a just 
and logical rate charge were put forward. 

The various systems of sales schedules for energy are based: 
either upon the principle of unmeasured charges which can be 
unrestricted or restricted by time and place or upon the principle of 
measured charges which can include demand, maximum rate of con- 
sumption, quantity, and time. The measured charges again can be 
based upon one or two or on all three fundamental units. 

Two basic theories were developed in practice in regard to fixing 
the price of electrical energy sold to the consumers. One is the 
so-called cost- of -service theory which is the oldest one, and which 
was long held to be the only sound one in principle for rate 
making by public utilities, and is still apparently supported by 
the National Electric Light Association. Its principle is, that 
a public utility company is justified in charging the whole- 
sale consumer, who is in the position to erect an isolated plant for 
his own purpose, only just enough to defeat any possible competition 
by any possible isolated private plant. 127 The revenue thus obtained 
may fail to cover but little more than the bare expenses. The small 
consumer, especially the residential consumer, gets a rate as high 



416 

as necessary to cover the remainder of the costs plus a desired 
profit. 

The second theory is the so-called "two-rate" theory now 
adopted by the most of the public service commissions. It is based 
on the principle of proportioning the cost of each type of service. 
The proportional cost of each service plus a fair profit is borne pro 
rata by each individual consumer. The workings of this second, or 
cost-of -service, theory can be outlined in general as follows : 

The central station costs are divided into two groups: (1) 
variable expenses covering expenses which rise or fall with the 
increase or decrease of the station's output. In that class belong 
all the expenses in regard to fuel, oil, water, the major part of the 
generating plant labor, and it also includes that portion of allowed 
profit which is over and above a fair interest rate on investment; 
and (2) fixed expenses which includes all the expenses independent 
of output and which go on day by day, whether there is a full load 
or the plant is idle. They include interest on investment, taxes, 
depreciation, obsolescense of equipment, insurance, station upkeep, 
salaries, etc. 

These latter expenses are again divided into two parts: (a) the 
cost caused by each individual consumer, such as reading of meter, 
billing, fixed charges on meter, etc. ; and (b) covers the remainder, 
each consumer's share being dependent on the proportional part of 
station — equipment necessitated by that consumer's power — demand. 
Thus the total charges to each consumer covers : 

E the energy charge 

C the consumer charge 

D the demand charge (capacity or readiness charge), or 

T=E+C+D 

£ is a flat rate of as many cents per kilowatt hours consumed as 
are derived by dividing the total variable yearly expenses by the 
total variable yearly expenses by the total kilowatt hours so sold. 

C is a fixed sum per month representing the cost of a consumer 
to the company regardless of consumption. It is the actual tangible 
outlay of the company for installing, reading and accounting the 
particular meter. 

D is the proportion of the distribution system and central station 
fixed expenses incurred by a said consumer. The majority of the 
utilities corporations make D proportional to the consumer's maxi- 
mum demand, measured directly by recording wattmeters for whole- 



417 

sale consumer's, and for retail consumers it is approximated from 
experience. It is a common procedure to measure or assume a 
maximum demand of each customer and charge pro rata that pro- 
portion of foregoing fixed expenses which that maximum bears to 
the sum of maximum of all consumers. The opponents of this 
method show that D for any definite class of customers should be 
based on the degree in which that class shares in the station peak 
load. 

In an article by Dickerman, on Comparison of Electric Light and 
Power Rates {Power, Vol. 42, p. 8, etc.) the rates for different classes 
of services from residential lighting to wholesale commercial con- 
sumer throughout the United States are compared. Carbo-electric 
as well as hydro-electric plants axe included. The comparison shows 
that: 

1 All costs, including some profits, of generation and delivery 

to substations is less than 1 cent probably 0.8 or 0.9 cent 
per kilowatt hour 

2 The bulk of the schedules are based on the principle of 

number of hours of use of demand, either after the Hop- 
kinson or the Wright System 

3 Many companies depart from the system and provide so- 

called ''quantity rates" not taking the connected load as 
basis of rate making. Such quantity rates are usually 
rather low 

4 Schedules providing for a ratio of 4^ or less between the 

charges to small and large consumers are enabling the cor- 
porations to make ample profits, hence ratios of 5 or 6 or 
more are entirely unjustified 

5 Cities in the far West have more equitable rates and lower 

rates than the cities in the Eastern States of the United 
States. 

Dr. John Hopkinson was in 1883 the first to suggest the use of 
"maximum demand" in addition to the number of "units" or kilo- 
watt hours as absolutely essential for arriving at the cost of supply- 
ing electric energy and A. Wright in 1893 developed and patented 
a "demand indicator" for measuring the "maximum demand." 
Since then papers without number have been written on the subject 
of rates and every phase of it has received critical attention. But 
measuring simply the kilowatt-hour consumption gives no indication 
whatever of the load factor. The maximum demand is one of the 



4i8 

variable and must be determined by a method, cheap and reliable, 
as otherwise no logical basis of rate can be found. Measurements 
of the maximum demand by means of special indicators are in use 
but for the small minority of large wholesale consumers only, while 
no attempt is made to ascertain the correct maximum demand for 
the great majority of users of electric energy. 

The residential service is no longer restricted to lighting, and 
with the electrical household appliances coming more and more into 
use, includes power service which will necessitate a material modifica- 
tion in the treatment of this class load. The central stations aware 
of this change, though obtaining their information solely from the 
one item of kilowatt-hour consumption, established rates for this 
largest service supplied by them, taking into account the variations 
in the amount of energy required. The load factor however is not 
established by any measurement but determined by observation, 
arriving at a close degree of approximation. 

In order thus to render a logical bill for electric service the rate 
maker has to have recourse to makeshifts. The most usual method 
is to base the rate on the connected load — the total capacity of the 
consumer's equipment, together with kilowatt hours. The bill thus 
becomes a function of the customer's equipment and not of the 
extent of the use of that equipment. Another method is to make 
observations at the time of day or week when the consumer is pre- 
sumed to take his maximum, and this approximation is then taken 
as representing the maximum demand. For lighting rates the maxi- 
mum is generally approximated by being based on the number of 
rooms illuminated, the character of rooms is sometimes taken into 
account, or the area illuminated, or even the cubic content of the 
illuminated space. 

In 1915 Alexander Dow, President of the Detroit Edison Com- 
pany formulated (see Electrical World, Jan. 2, 1915) what had 
already been taken into consideration by the various rate-makers 
and by various makeshifts expressed in the rate charges by many 
of the central stations, into three main items to serve as basis for 
charging a given class of customers: 

1 Costs varying with the number of customers served 

2 Costs varying with demand 

3 Costs varying with the use of energy; that is kilowatt hours 

sold. 

The first of these items amounts to a service charge and requires 
no measuring. The second item requires a "maximum-demand" 



419 

meter and the third item a kilowatt-hour meter. Two points of 
some importance however were omitted by Mr. Dow. One is the 
time of the maximum demand, which to-day can be determined only 
by approximation, though that can be done with a reasonable degree 
of accuracy since the classification gives that indication, the other 
point omitted is the power factor. Energy used at a low power 
factor requires more generator space, more transformer capacity 
and more transmission and distribution capacity than energy used 
at a high power factor. It is well recognized that true power has 
to be separated from apparent power, as it is the reactive power 
of the customer's installation which affects the net work, and that 
alone can rightfully be charged to him. 128 To sum up the require- 
ments necessary to serve as basis for a logical energy rate (cost-of- 
service system) are: 

1 Kilowatt-hours alone cannot serve as basis 

2 Maximum demand has also to be measured to recognize the 

load factor 

3 Power factor should be recognized as one of the variables. 

In accord with the general tendency towards standardization and 
simplification certain simplified tariff systems have in late years been 
proposed. Systems which are said to be suitable in any area of 
supply and whose principle is the abolishing of the "diversity factor" 
as well as of the "load factor." The most characteristic of these 
suggested systems is the so-called "postal plan" of selling power to 
industry and any other consumer of electric energy. 

The postal principle of selling, means a fixed charge per kilowatt 
hour independent of maximum demand and number of customers 
served, taking only into account the number of kilowatt-hours sold. 
The idea is based upon the following argument : A two-cent stamp 
will carry a letter anywhere — the two cents representing the sale 
price of the postal service for a given unit weight of letter. The 
census figures show that the average cost of generating electric 
energy is less than one cent per kilowatt-hour ; hence a uniform rate 
per kilowatt-hour could be established — say a one cent rate — inde- 
pendent of class of service — lighting, power or traction load and 
independent of quantity of service required. The question is whether 
such a plan is feasible with conditions as they are at present in the 
central power station industry. To-day what mostly handicaps its 
development — either carbo-electric or hydro-electric — is the necessity 
of providing its own means of transmission and distribution, which 



420 

requires a great initial capital investment with high costs of main- 
tenance. 

The postal service is that of a common carrier of the public 
utility order and in applying the principle of selling service for a 
given unit of weight for a fixed standard price, to the selling of 
energy, we will have to adopt the common public carrier system 
for the transmission of electric energy. The British super-power 
station plan recognizes that necessity and provides for the standard- 
ization of frequency and voltage of the main transmission and 
and distribution. A universal standard tariff systems, like the postal 
distributing systems and for an authority do deal with generation 
plan of selling energy, would certainly have an enormous influence 
on industry and will give a tremendous impetus to the use of electric 
energy. Power would then really become a commodity, a cheap, 
staple and indispensable commodity. 

Conclusion 

The prime function of industry is service to the community — 
to be rewarded commensurately with that service. Power is the basis 
of industry, without it industry cannot exist. Hence power is a 
force of prime necessity to the welfare of the community, and should 
be dealt with in that sense. The criterion in the generation and 
sale of power therefore, should not be primarily or exclusively the 
shareholders' profits in that specific enterprise, but should have first 
regard to the interests which the country and community at large 
have in the generation and sale of power, that is, in the availability 
of cheap and unlimited power. It is the question of dollars for a 
few or the welfare of all. 

It must not be forgotten that the world order around us espe- 
cialy in its economic bearings and the position of industry, have 
not yet fully emerged from the formative period ushered in a hun- 
dred years ago by the so-called "industrial revolution." Present 
day economic procedure is still mainly the product of a period when 
the nature of energy resources were only imperfectly known and 
the technology of the employment of energy only crudely developed. 

In the old and still lingering order men worked with the idea 
that the resources of nature were inexhaustible, and their undeveloped 
methods and conditions were inadequate and impotent, unable to 
avoid large series of wastes, which are not only inexcusable with 
the modern means at hand, but which are responsible to society being 
directly connected with economic and social questions at the base of 



421 

general well being. There is still lack of scientific or even improved 
methods of coal mining and oil production, both cases causing enor- 
mous avoidable waste and loss, the consequences of which, are possi- 
bly, more serious in regard to oil — the ultimate exhaustion of which 
is in view 129 than concerning coal, while only a fraction of the 
hydroelectric resources, capable of replacing coal and oil, are devel- 
oped. The absurdity of coal being hauled across the whole con- 
tinent to move trains across the Rocky Mountains Divide, while 
ample hydroelectric power is close at hand means waste in effort 
and material. The present utilization of coal allows only a very 
low recovery of its energy content, in addition to which, one-quarter 
more coal on an average, is burned in power production than is 
necessary. Likewise the utilization of oil is efficient only in its 
refined product but most wasteful in the crude form. 

Wastefulness in production in any branch of industry is not 
necessarily considered an evil, but rather as an asset to profit. It 
is found that the public can be relied upon to pay any price so long 
as the production cost is high enough to prevent the profits from 
appearing extortionate. The expense of waste in industrial pro- 
duction is passed over to the consumer. Prices are maintained by 
the wilful reduction of production, which is kept below the level of 
demand. The majority of industries use only half of their equip- 
ment, or otherwise stated work half-time. There is lack of coordina- 
tion, and lack of proper media of distribution, with the result that 
competition burdens the commodities with expenses which are far 
in excess of the costs of production. To sell the product costs more 
to-day than to produce it. 

The waste of labor and material, the inadequacy of distribution 
and inelasticity of credit form a group of causes intimately con- 
nected and mutually reactive upon each other making impossible 
the attainment of 100 per cent production either from industry or 
the utilization of the soil. This result is directly due to the lack of 
coordination between resources, technology and economic procedure. 

In the realm of development and production free cooperation and 
individualistic endeavor may seem desirable, as competition appears 
as an effective means of progress and development at that stage. 
In the realm of full utilization and distribution competition fails to 
give adequate results, its effect is harmful and must give way to 
constructive mutual consideration and * coordination in the interest 
of the community as a whole. 

The "industrial revolution," which brought in the formative 
period now passing away, was in close interrelation with a general 



422 

world upheaval. To-day the world again is in travail out of which 
will arise a new world order, economic, political, and social, in which 
coordination of all human activity towards economy of material and 
human effort will be the basic principle. 

The "formative period" has been the age of coal as fuel and 
steam as power. The new time is already outlined as the era of 
coal fully utilized and water as resources of energy, and electricity 
as power. 

The inherently local nature of the generation and use of steam 
power prevented it from ever becoming a commodity. The contrary 
is true in regard to electric power. The characteristic of electric 
power constituting it a true commodity, the fact that it can be gen- 
erated in bulk and sold in retail, the ease and flexibility of its trans- 
mission to a distance from its point of generation by means whicr 
can be extended at will, make natural the centralization of its genera- 
tion. That centralization makes possible industrial efficiency with 
economy in material and human effort. 

These results are only attainable through coordination of re- 
sources, technology, and economic procedure, necessitating a co- 
operative organization of the whole industry of power production, 
for the efficient employment of energy resources, their production 
and full utilization — multiple production — the generation of energy, 
its transmission and distribution, on the principle of service to the 
community. 

The vital question is whether an organization so based on the 
principle of the common good, is to come into fact or whether the 
power industry which is already in the hands of large amalgamated 
interests shall become more and more centralized in those hands 
until it constitutes an absolute monopoly, holding at its mercy the 
entire industrial and other power requirements of the whole people. 
It appears obvious that the only solution furnishing escape from so 
undesirable an alternative would be public ownership of the resources 
of energy, its production, generation, transmission, and distribution. 
This solution alone would permit a proper and full development of 
water-power for hydroelectric purposes, and the complete utilization 
of coal and oil in the sense of multiple production, making of power 
a cheap and universally available commodity. 

Whether such an organization should take the form of super 
power stations combined with by-product plants and transmission 
and distribution systems, following the plan outlined by me to the 
Hon. F. K. Lane, Ex-Secretary of the Interior, or whether it should 
be a cooperation between central power stations, isolated plants, coke 



423 

and gas plants, and a separately organized power transmission and 
distributing system, whether the management of the power produc- 
tion, the fuel utilization plants and power transmission and distrib- 
uting systems should be in the hand of the state, or in the hand of 
semi-public, state-financed, public utilities corporations, or should be 
left to private corporations under public supervision, are questions 
beyond the scope of the present discussion. 

One thing however is clear. In the economic conditions now aris- 
ing, the principle of electricity as a commodity, the principle of com- 
mon public carrier applied to the transmission of power, and the 
principle of multiple production for the utilization of energy sources 
will be the most important, if not the basic economic force in the 
industrial order and in the life^f the people itself. 



APPENDIX 1 

The diagrams in Figs. 13 and 14 represent applications of the Grinevetski 
method of graphical analysis of the working process in a steam boiler. Briefly 
stated, the diagrams consist of two main curves: a heat curve TQ and a charac- 
teristic HQ, a third auxiliary curve, known as a radiation curve, being added for 
use in determining the influence of radiation of the incandescent fuel on the 
grate on the whole process. The heat curve is constructed from the tempera- 
tures of gases T as ordinates and thgjaeat in the gases of corresponding tem- 
perature as abscissa Q. The heat developed during the combustion could be 
represented as a function of temperature. Assuming the following symbols: 

Bfi = Fuel consumed per hour in lb.; 

Gb= Weight of gases in lb. per 1 lb. of fuel burned; 

Cp= Average specific heat of gases (at p = const.); 

T = Temperature of gases; 

Tb = Temperature of furnace; 

T* = Temperature of escaping gases; 

T a = Temperature of air entering the furnace; 

Q' = Heat in gases in B.t.u. at temperature T; 

@a = Heat in gases in B.t.u. at temperature T a \ 

Q =Heat of gases developed during combustion in B.t.u. per hour; 

Qb = Heat value of fuel in B.t.u. per lb. 

Thus 

Q = Q'-Qa (1) 

and 

Q'=cG b B h t (2) 

The specific heat of the gases could be represented as a lineal function of tem- 
perature, 

C p =c + 8t, (3) 

where c and 5 are constant for the fuel of given composition and definite per- 
centage of C0 2 in gases. For variable C0 2 and different fuels, c and 5 vary but 
slightly and for all practical use have little effect on the calculation. 
Thus from equations (2) and (3) we have 

Q'=cG b B h (t+^ (4) 

In this cGbBh is constant, except in case of infiltration of air into gas passages, 
and at any given condition of combustion can be taken as a scale for the diagram. 

The expression ( H — 1 2 \ is an equation of a parabola, and as such can be easily 

plotted. Assuming c, in inches, is a scale for ordinate equal to i° F. and w, 
in inches, is a scale for abscissa equal to 1 B.t.u., equation (4) becomes: 

Q'w=(t+^b (5) 

and the method of plotting this curve is evident. It gives the heat curve TQ. 



426 

If Q' = Q a , then Q — 0; and therefore the ordinate shall pass through temperature 
T a of the curve. 

From equations (4) and (5), 

C 

w= ~ -. in inches (6) 

cGbBh 

Referring to fuel consumption per hour to a unity when Bh = 1 lb., equation 6a 
is obtained 

w Q =— — in inches (6a) 

CLrb 

The application of this heat curve is apparent. The temperature of the 
gases T is known and, being represented in a scale b, if referred to the curve and 
projected on abscissa, gives the corresponding heat in the scale w = \ B.t.u. 
Thus from the heat value of the fuel and the weight of the gases developed 
from its combustion, may be found the theoretical temperature in the furnace T'b 
by projecting on the curve QbW and reading the temperature at this level on the 
corresponding scale of ordinates. 

The deviation of the parabola from the straight line OC indicates the varia- 
tion of specific heat of gases with the change of temperature, which is con- 
siderable at the high temperatures. If 

Qo=BhQb =heat available; 

ft-C+^-heat utilized { %) ^ I * a " H< ? , , . . 

I Q 1 by convection and transmission; 

Q 2 —the loss due to incomplete combustion; 

<2 3 = Q' 3 +C>"3 = external losses { ^3 in furnace; 

- I Q z m gas passages; 

Qi= is the heat lost in escaping gases. 

We can study graphically the heat balance as well as ascertain and locate 
the cause of any loss due to inefficient performance of a certain part of the 
boiler or furnace. Q± is directly shown by the heat curve, and an evaporative 
test supplies the data of Q\\ hence the equation of heat balance is: 

<22+<23 = <2o-(<2i+<24) (7) 

Similarly by further graphical analysis the other elements could be ascertained. 

It is useful to plot also the curve of radiation Td which represents the 

equation 

' T+459.2 







491.2 



In accordance with the equation of Stephen for an ideal black body, the heat 
transmitted by radiation is: 

Q=<rFT\ 

where T— absolute temperature of the body, F= radiant area, <r = constant. 
This constant in metric units for lamp black <n = 4.33 cal. per m. 2 per hr., or 1.678 
B.t.u. per sq. ft. per hr. Professor Grinevetski gives a table (see Table I) for 6 
at temperatures from 302° F. to 2912° F. The intersection of the radiation 
curve, plotted in accordance with this method, with the heat curve determines 



427 



TABLE I— VALUES OF 6 AT VARIOUS TEMPERATURES * 



T, Deg. Cent. 





T, Deg. Cent. 


d 


150 


320 


900 


18,930 


200 


501 


950 


23,370 


250 


748 


1000 


26,540 


300 


1,078 


1050 


30,650 


350 


1,506 


1100 


35,550 


400 


2,051 


1150 


41,000 


450 


2,732 


1200 


47,080 


500 


3,571 


1250 


53,800 


550 


4,590 


1300 


61,210 


600 


5,810 


/ 1350 


69,370 


650 


7,260 C 


1400 


78,340 


700 


8,960 


1450 


88,150 


750 


10,955 


1500 


98,810 


800 


13,210 


1550 


110,460 


850 


15,980 


1600 


122,800 



T&, the temperature in the furnace and Q'i, the heat utilized by radiation. 
In this case, like all others, the comparison of ideal conditions with those observed 
gives a valuable indication as to direction in which we must apply our efforts, 
and in most cases as well supplies us with the means of measurement. Only 
the analysis of the whole problem in its entirety, however, can tell whether 
further efforts are worth trying in practice or not. 

The rule made manifest in this research on radiation could be expressed 
as follows : Under equal conditions of combustion the temperature of the furnace, 
is in direct proportion to the rate of firing. 



B n = 



lb. of fuel per hour 
area of grate surface' 



and in inverse proportion with the intensity of radiation. 

The second main curve, or characteristic, has the same heat scale on abscissa 
as the heat curve, but as ordinates we take the area of heating surface, H. If 

&=factor of heat transmission in B.t.u. per sq. ft. per hr., and 

7s = temperature of boiler water in accordance with Redtenbacher's re- 
searches, we have, 



whence 



k(t-h)dH=-dQ, 
dQ 



dH 



= k(t-h). 



(8) 



This equation can be plotted very conveniently, if k is constant, and the 
tangent of the angle between tangent to characteristic curve and the line of 
ordinates, is in direct proportion to the difference of the temperature of the 
water in the boiler and the temperature of the gases in contact with a given 
section of the heating surface. Thus, with Tk and k known, the shape of the 

* Values calculated in c. g. s. units. . 



428 

characteristic curve is determined by the temperature of gases (abscissa Q) and 
is independent of the ordinate. This is a particularly convenient peculiarity, 
since the curve can be plotted from any initial temperature without changing its 
shape; a number of tangents plotted in accordance with equation (8) determines 
the curve. From this equation it is evident, that with the decrease of (/— tt) 
tang <f> decreases and with t=fa tang <£ = 0, and our ordinate KH of the heat 
curve for temperature tk will be the asymptote to the characteristic curve. If 
with t=tt, H = 0, and the abscissa of the characteristic curve will be on the 
ordinate T& of the heat curve scale. The ordinate of the characteristic curve 
starts from the axis thus located, R—R, which determines the area of heating 
surface in contact with the hot gases, while the corresponding temperature of 
gases is represented by the distances between OQ and tQ. The scale for the 
heating surface area is determined as follows: 

tik 
f= ^B> fa inchCS (9) 

From this we can estimate the temperature of the gases in any part of the 
gas passages. If H=Ht (total heating surface), we know from the heat curve 
that T=T a and Qi. On the other hand, if we know the various temperatures 
we can locate the sections of gas passages in which they are present and from the 
characteristic, the areas of the heating surface. If k (factor of heat transmis- 
sion) is unknown, but J& and T s are known, the factor of heat transmission itself 
can be determined from equation (8). 

The rate of driving the heating surface is shown by the characteristic curve. 

Assume 

dQ 



for average conditions and 



gm - Q '- Q ' 



H"-H' 

for the local rate of driving in B.t.u. per sq. ft. per hor. Also 

Q'-Q" 



gm 



H"-H' 



which equals average rate of driving for a given portion of a heating surface. 

The first equation is a tangent of the angle between a line tangent to the 
characteristic curve and the axis of ordinates, and the second, a tangent of an 
angle betwen a line normal to the same ordinate and (H" — H'), or 

tang * = dHf * ^ 

Since 

b 
w = 



cGbBh 

and 

f— 5?L (9) 

J cGM w 

the equation becomes 

Tik 

g = tang0Xy (11) 

This can be plotted as 

«-i • (12) 



429 

where from h—- is a scale for the rate of driving the heating surface = 1 B.t.u. 
n 

per sq. ft. per hr. From equation (12) can be determined g m for the entire boiler 

and furnace in which case Q\ should be added as radiant heat absorbed. 

In determining the volume of gases, the volume V with p = constant is 

proportionate to the absolute temperature and evidently can be read on the 

ordinates of the heat curve where the scale for volumes per second in cubic feet 

will be , 

*-<£» w> 

where hb= barometric pressure, 

f = ratio of volumes of gas and air at the same temperature. 

Thus, if h = 760 mm., 

K-gSy • • • • ™ 

{gb^wBh? 

Whence from equations (13) and (13a), we learn the scale for volumes of gases 
per second, we can determine the volumes per second for any temperature at 
any portion of gas passages. Consequently taking into consideration the cross- 
sectional area of gas passage, we can determine the average velocity of gases in 
the corresponding places. 



APPENDIX 2 



SPECIFICATIONS FOR FURNISHING AND DELIVERING BRITISH 
THERMAL UNITS IN SHAPE OF SEMI-BITUMINOUS COAL 

Amount of Heat-Units, in Shape of Coal, Required 

1. The approximate amount of heat-units, in shape of coal, required under 
this contract, the point of delivery and the approximate rate of shipment, is as 
follows: 



Point of Delivery- 



Approximate Number of British Thermal 
Units Required 



Point of Delivery 

2. The price stipulated for the coal delivered at does 

cover all the work and expense incidental to or connected with the unloading, 
hauling, storing, and trimming of the coal in the sheds or bunkers at the various 
plants, to the satisfaction of the engineer. 

Character of Coal Required 

3. The sizes of semi-bituminous coal are to be specified as follows: 

a. Run-of-mine. 

b. Crushed not larger than 1| inches in diameter. 

The size of coal, the minimum number of B.t.u. per pound, the maximum 
per cent of volatile matter, the maximum per cent of ash, the maximum per cent 
of sulphur and the maximum per cent of moisture at the different points of 
delivery must be as follows: 



Point of 
Delivery 



Size of 
Coal 



Minimum 

Number of 

B.t.u. as 

Delivered 

Per lb. 



Maximum 

Per Cent 

of Volatile 

Matter, 

Dry 



Maximum 
Per Cent 

of 
Ash, Dry 



Maximum 
Per Cent 

of 

Sulphur, 

Dry 



Maximum 
Per Cent 

of 
Moisture 



Causes of Rejection 
4. Should any coal delivered hereunder contain more than the per cent 
of moisture, sulphur, volatile matter, ash, or fewer than the number B.t.u. 
per pound allowed above, the coal can be rejected. 



43i 

Weighing 

5. All the coal delivered must be weighed at the point of loading or reloading 
and verified by Company's Coal Inspector, the weight shown by his state- 
ment to be indisputable. 

Sampling 

6. Samples of coal as delivered will be taken by a representative of the 
Superintendent of Power. All the coal will be sampled at the time of its being 
delivered to the plant. The sample taken will in no case be less than the total 
of 500 pounds, to be selected proportionately from the lumps and fine coal in 
order that it will in every respect totally represent the quality of coal in con- 
sideration. To minimize the personal equation, the gross sample will be pulverized 
in the crusher, until none of the fragments exceed 1 inch in diameter. The fine 
coal will then be mixed thoroughly and divided into four equal parts. Opposite 
quarters will be thrown out, and Ihe remaining portions thoroughly mixed 
and again quartered, throwing out opposite quarters as before. This process 
will be continued as rapidly as possible until the sample is reduced to such an 
amount that all of the final sample will be contained in the shipping cans or 
jars of not less than 2 pounds capacity, these cans or jars to be sealed air-tight. 

Analysis 

7. The sample prepared as indicated above will be forwarded to the Fuel 
Department chemical laboratory, where it will be analyzed and tested imme- 
diately on receipt, following the method adopted by the American Chemical 
Society and using a bomb calorimeter standardized against cane-sugar, as 
obtained from the National Bureau of Standards at Washington, D. C. A 
copy of the results obtained by such analysis will be mailed to the contractor 
upon the completion of the test, and not later than forty-eight hours after taking 
the sample. The report of the chemical laboratory will show: 

1. The number of B.t.u. per pound of coal as delivered. 

2. Per cent of moisture. 

3. Per cent of volatile matter. 

4. Per cent of ash. 

5. Per cent of sulphur. 

Should there be no question raised by the contractor within twenty-four 
hours after receiving the copy of the chemical report as to the figures shown 
by the analysis, the sample of the coal will be destroyed. In case the con- 
tractor does not abide by the results of this analysis, a second analysis from 
the same sample will be made, and if the discrepancy between the two analyses 
will be shown to be 2 per cent or less in the determination of B.t.u. per pound 
of dry coal, the per cent of volatile matter, the per cent of ash and the per cent 
of sulphur, then the data of the first analysis will be final and the cost of the 

second analysis shall be borne by the Company, and the results of such 

second analysis shall be regarded as final, with the exception of the per cent of 
moisture, which in all cases is to be taken from the results of the first analysis 
on which basis the number of B.t.u., as delivered, should be figured from the 
number of B.t.u. dry. 

Basis of Payments 

8. The number of heat-units in each delivery shall be calculated by mul- 
tiplying the number of B.t.u. in one pound of coal as delivered, as shown by 



432 

the chemical report, by the number of pounds delivered, as determined by 
the actual weighing. This number of heat-units will constitute the basis for 
the corresponding payments. 

Notice of Shipment and Arrival 

9. The contractor must deliver to the Power Department the original bills 
of lading or manifests with each shipment of coal. No coal will be accepted 
unless such bills of lading or manifests are furnished. 

Notice of all shipments shall be mailed promptly to the Testing Engineer. 
The notices shall show the numbers of each car or name of boat, with character 
of the coal, the weight of the coal, the date when the same was shipped. These 
notices shall be accompanied with the original bill of lading or manifest. 

Cars 

10. If cars are to be used, they shall be of a suitable size and shape for 
unloading, and shall meet the approval of the Superintendent of Power. 

Delivery 

11. In case of failure on the part of the contractor to deliver the coal at 
the proper plant or switch in the quantities ordered and at the rate herein 

specified, within days (Sundays and holidays included) after the 

date or written notice mailed to him by the Fuel Department, directing him 

that shipments of coal are desired, then, and in that case the Company 

shall have the right to purchase such quantity of coal in the open market as 
may be required, and to deduct from any estimate that may be due the con- 
tractor the additional cost of the said coal delivered at the dock, railroad station, 
switch or other point of delivery, where it may be required, over and above 
the price stipulated in the contract for coal at the point of delivery. 



APPENDIX 3 

EMPTYING COAL CARS INTO COAL CRUSHER— TASK WITH 

BONUS 

Application 
Coal cars of Gondolier Type containing 20 tons or more, when unloaded 
into crusher. 

Task 

A Two men in car and one operating crusher 0. 03 hour per ton 

B One man in car and one man in crusher . 05 hour per ton 

Conditions 

1 Not more than four cars may be on the siding at once 

2 When three operators are used, one will look after crusher and two will unload 

into hopper 

3 With two operators, one will be in car and one in care of crusher. In this 

case, the man in charge of crusher will assist the other in changing cars 
and opening traps 

4 If two men constitute gang, the one in charge will care for crusher. If three 

men on gang, the one in charge will assist in unloading 

5 The man in charge will start and stop the crusher and conveyor and see that 

the coal is dumped in proper bunker. He will also weigh the cars, make 
out the time cards and change the time cards 

6 This task will not apply when weather conditions are such as not to permit 

the men to work continuously and unhampered. It is the duty of the 
foreman to determine such conditions 

Method 1 

A One man takes rope and hooks on empty car 

B Other man starts motor and tightens rope 

C Motor pulls car ahead and out of way 

D First man removes rope and carries to next loaded car 

E Motor tightens rope and pulls loaded car into position 

F Remove and put away rope, get sledge hammers and shovels 

G Open traps, one man on each side 

H Using sledge hammers, pound cars until all loose coal falls out 

J Get into cars and with picks and shovels, remove rest of coal 

K Shovel loose coal from track in order that car may be removed 

L Close traps 

Details 

A — Carry rope F — Put away rope, get shovels 

B — Start motor G — Open traps 

C — Pull away empty cars H — Hammer till all loose coal is out 

D — Carry rope to next car J — Shovel out rest of coal 

E — Pull next car to position K — Clean tracks 

L — Close traps 



434 

Values Selected 



No. 
Men 


No. 
Tons 


A 


B 


c 


D 


E 


F 


G 


H 


J 


K 


L 


2 
1 


52 
62 


0.40 


1.0 


0.40 


1.0 


1.5 


0.7 


1.7 
0.8 


12.0 
12.0 


33.0 
120.0 


1.6 


2.0 





















Selected 



0.40 



1.0 



0.40 



1.0 



1.5 



0.7 



0.8 



0.1 



1.0 



1.6 



2.0 



This task will apply to two men in car. 
A+B+C+D+E+F+G+(H-f-J) Xtons+K+L 

<A+B+C+D+E+F+G+K+L)X1.25 11.75 

(H+J)X1.25 + (1. 1X1.25) 1.375 

Task— 1 1 . 75 (1 . 375 Xtons) 

For 20 tons — 38 . 5 min. — . 64 hour 
This task will apply to one man in car. 

11.75— (1.375 Xtons) X 2)— 
.11.75(2.75 X 2 tons) 

30 tons — 94. 25 min 1 . 50 hours 

40 tons — 121 . 75 min 200 hours 

50 tons — 149.25 min , 2.50 hours 

60 tons — 176 . 75 min 3 . 00 hours 

70 tons 3 . 50 hours 

For one man 
Estimate 0.5 hour for 10 ton 

Check on Task 
The capacity of the coal conveyor is 40 tons per hour. It is evident, there- 
fore, that the operators cannot work faster than the coal is carried away. 

40 tons per hour . 025 hr. per ton 

0.25 hr. per ten tons 

Allow 20% incidental delays 

0.250.50 . 3 hr. per ten tons 

0.3 hour per ten tons should then be our task for all cars since it applies 

to all containing more than twenty tons, and no cars contain less then twenty 

tons. „ 

Bonus 

25 per cent bonus will be paid, figured on time allowed for unloading. 

When ready to start on a car, the Power Plant Clerk will issue the regular 
time card, form G-126, and stamp the time starting and the time of completing 
the job. 

Complete instructions for calculating this bonus will be found in Master 
Set of Instructions, under Timekeeping in files at Main Office. 

O. K Approved 

Vice-President General Superintendent 



APPENDIX 4 

WHEELING COAL IN BARROWS FROM YARD TO COAL CRUSHER, 

TASK WITH BONUS 

Application 

This applies to a gang consisting of any number of men. A bonus of 25 
per cent of time allowed to fill a bunker is paid. A bunker when filled to the 
average height holds about 50 tons. 

/ y 

Task in Man Hours per Bunker 

Distance Wheeled Hours per Ton Hours per Bunker 

10 0.255 63.8 

20 0.280 70.0 

30 0.305 76.3 

40 0.330 82.5 

50 0.355 88.8 

60 0.380 95.0 

70 0.405 101.3 

80 0.430 107.5 

90 0.455 113.8 

100 0.480 120.0 

110 0.505 126.3 

120 0.530 132.5 

130 0.555 138.8 

140 0.580 145.0 

150 0.605 151.3 

160 0.630 157.5 

170 0.655 163.8 

180 0.680 170.0 

190 0.705 176.3 

200 0.730 182.5 

210 0.755 188.8 

220 0.780 195.0 

230 ■ 0.805 201.3 

240 0.830 207.5 

250 0.855 213.8 

260 0.880 220.0 

270 0.905 226.3 

280 0.930 232.5 

Conditions 

1 The men will earn or lose their bonus as a gang. 

2 Each man is supplied with a wheel barrow which holds 250 lbs. coal. 
Also a scoop shovel style No. 5. 



436 

3 The foreman will receive bonus calculated on the time of the men. He 
himself does not use a wheelbarrow, but he is required 

a To see that each man does his share 

b To keep crusher in operating condition 

c To look after conveyor buckets 

d To see that men are not interfered with. 

4 The boiler room foreman will see that all ashes are removed during the 
time when the day shift is not working. Hence, the operators may start work 
with the whistle and not stop until the end of the day. 

5. A bunker is full when containing approximately 250 tons. It is con- 
sidered full when, without being trimmed, the coal reaches within a few inches 
of the conveyor buckets. The Boiler Room Foreman inspects the bunker at this 
time and upon his approval, the time card is turned in to the office. 

6 The Boiler Room Foreman at the beginning and completion of each 
bunker will measure the distance of the coal from the crusher and the average 
will be used in computing the bonus. He will also see that the next bunker is 
empty before starting the men to work on it. Any trimming shall have pre- 
viously been done by the boiler room laborers. 

7 Bonus is determined at the completion of each bunker and is figured at 
25 per cent of time allowed for the bunker. Instructions for calculating this 
will be found under Timekeeping, in file of Master set of Instructions, Main 
Office. At the start of each bunker, the Power Plant Clerk is notified, and he 
will issue a time card (Form G— 126) stamped with the time of starting. This 
is turned in at completion of the bunker with the names of all operators. It 
is immediately stamped with time of completion. 

Method 

Wheelbarrow from crusher to coal pile, drop barrow (A). Pick up shovel 
(B). Push shovel into pile, pick up shovel full of 12^ lbs. coal and throw into 
barrow. (Note: twenty shovelsful will fill barrow.) (C). Drop shovel and 
wheelbarrow to crusher (D). Dump coal into crusher not too fast, for crusher 
may be injured (E). 

Details 

A Wheel to coal pile, drop 0.010 time per ft. 

B . Pick up shovel 0. 075 time per 250 lbs. 

C One shovel full of 12^ lbs 0. 075 time per shovel 

D Drop shovel, wheel to crusher 0.010 time per ft. 

E Dump coal in crusher . 150 time per 250 lbs. 

Let X = distance wheeled constant. 

Synthesis 

(A+D)X+B+E+20C = Time allowed per barrow 
0. 02X+0. 075+0. 150 + 1. 500 = Min. per barrow 
0.02X + 1. 725X8 =Min. per ton 

. 0025X +0 . 23 = Hours allowed per ton 



Approved 

General Superintendent 



O. K 

Vive-President 



FOOTNOTES 

1 See Danger of Fuel Famine by Walter N. Polakov, in Industrial Man- 
agement May, 1917. Editorial in the same magazine in September, 1917. 
Report of May 19, 1917, to the Speaker of the House of Representatives the 
Federal Trade Commission. Will There Be a Fuel Famine, The Literary 
Digest for June 16, 1917, Coal Age, July 14, 1917, editorial by the author. 
Utilities Magazine for August, 1917. Electrical World, December 8, 1917. 
Forbes Magazine, December 8, 1917. / 

2 Dr. H. A. Garfield's supplementary statement, January 17, 1918. 

8 New York Times, January 6 said : "Shipping men yesterday were 
informed by the authorities of the port of New York that there was no 
anchorage room in the harbor, and that this situation would prevail until 
some of the vessels could get coal to enable them to sail." Also another 
paper records that "there are about 150 steam ships detained in the New 
York Harbor because of the lack of coal." 

4 Order of the United States Fuel Administration to stop production for 
five days and five Mondays. Later it was modified and operation was 
resumed a few days before it was originally ordered. 

6 Journal of The American Society of Mechanical Engineers, July, 1918, 
Part 2, page 608-609. 

8 D. M. Meyers, Transactions, The American Society of Mechanical 
Engineers, Volume 39, page 679 and 687. V. J. Azbee, Transactions, The 
American Society of Mechanical Engineers, Volume 38, pages 717 and 748. 

7 Dr. Theodore Hertzka, — Die Gesetze der socialen Entwicklung — 
"615,000 workingmen are only 12.3 per cent of the population of Austria 
capable of work, exclusive of all women, as well as males under 16 and over 
50 years of age. If all the 5,000,000 men were productively engaged, each 
of them would need to work only 36.9 days per year, in order to produce 
the necessaries of life for 22,000,000 people. Including all the articles of 
luxury all present wants of Austria's population will be satisfied in 60 dayi 
of work per year, or working 300 days per year, each day only Zy* hour* 
would be required without even considering improvements in productive 
methods." 

8 A. Bebel — Woman under Socialism — New York, 1904, page 278. 
•H. L. Gantt. 

M C. P. Steinmetz — America and the New Epoch — Harper Bros., New 
York, 1916, page 149. 

11 Charles Ferguson — The Revolution Absolute — page 195. 

13 Prof. Irving Fisher, Review of Reviews, February, 1910. 

"Walter N. Polakov — Valuation of Industrial Properties vs. Valuation 
of Industrial Methods. Transactions, The American Society of Mechanical 
Engineers, Volume 38, page 1297. 

"George Willis Cooke — Scientific Management — The Call (New York) 
August 24, 1911. 



43» 



10 Prof. Malcolm Keir in the Scientific Monthly, October, 1917. 

17 Charles Ferguson — The Revolution Absolute — page 209. 

"Bacon — Novum Organum — paragraph 17: "The form of heat or the 
form of light, therefore, means no more than the law of heat or the law of 
light." 

" Ibidem. 

20 Rene Descartes — Discourse of Methods and Mediations. 

81 Op. citata. 

22 H. L. Gantt— Work Wages and Profit— New York, 1913, page 41. 

23 Walter N. Polakov — Valuation of Industrial Properties vs. Valuation of 
Industrial Methods — Transactions, The American Society of Mechanical 
Engineers, Volume 38, page 1297. 

24 See author's discussion of An Analysis of the Principles of Industrial 
Management, by T. G. Roberts, U. S. N. in the Transactions of the Society 
of Naval Architects and Marine Engineers, New York, for 1917, page 276. 

25 H. L. Gantt — Industrial Leadership — Yale University Press, 1916, 
page 39. 

20 Walter N. Polakov— Planning Power Plant Work— Bulletin Taylor 
Society, 1916, Volume II, No. 6. 

27 Walter N. Polakov — Standardization of Cost of Power — Transactions, 
The American Society of Mechanical Engineers, Volume 38, pages 581-598. 

28 Notably those of H. L. Gantt — Transactions, The American Society of 
Mechanical Engineers, Volumes 37, 38 and 39. 

"August Bebel — Woman under Socialism — page 278, New York Labor 
News Co. 1904. 

80 "Famous engineer James Nasmyth of Patricroft, the inventor of steam 
hammer, is quoted by L. Horner in his report for Oct. 1852, substantially as 
follows : The public is little acquainted with the immense increase of motive 
power obtained through changes of system and improvements. The machine 
power of the district of Lancashire was for almost forty years under the 
pressure of timid and prejudiced traditions. But now the engineers have 
been happily emancipated. 

Condensed steam engines were put into operation pretty generally after 
1848 ; piston velocity was increased from 220 feet per minute as was regulated 
heretofore to 300 and 400 feet per minute; Woolf's "Double Cylinder Ma- 
chines" brought the question of fuel into the foreground. K. Marx in Volume 
III of "Capital" (pp. 117, etc.), says: "The Cornish and the double cylinder 
machines furnished one horsepower per hour for every 3% or 4 pounds of 
coal, while the machines in the cotton districts generally consumed 8 or 12 
pounds per horse power an hour. Such a marked difference induced the 
manufacturers and machine builders of Nasmyth's district to accomplish by 
similar means just such extraordinary economies as were then the rule in 
Cornwall and France, where the high prices of coal had compelled the manu- 
facturers to restrict this expensive branch of their business as much as 
possible. This led to some very important results. In the first place, many 
boilers, one-half of whose surface remained exposed to the cold outer air, 
in the time of high profits were covered with thick layers of felt, or brick 
and mortar, and other materials, by which the radiation of heat, which had 
been generated at such high cost, was prevented. Steam pipes were pro- 
tected in the same way, and the cylinders were also surrounded by felt and 
wood. In the second place, high pressure came into use. Hitherto the safety- 



439 

valve had been weighted only so slightly that it opened at 4, 6 or 8 pounds 
of steam pressure per square inch. ... in many cases the same steam 
engine, which yielded 50 horse powers at the time of the limited speed of 
220 feet per minute, yields now more than 100 horse powers. The highly 
economical results of employment of high pressure steam in condensing 
machines, and the far greater demands made upon the old machines for the 
purposes of business expansion, have led in the last three years (written in 
Oct., 1852) to the introduction of pipe-boilers, by which the cost of steam 
generation is again considerably reduced." 

It is extremely interesting to note in this connection that only partly due 
to new inventions and chiefly due to better use of the existing equipment and 
better power transmission, this progress enabled manufacturers to expand 
production without additional motive power. According to Redgrave's Report, 
Factory, Oct., 1852, p. 58., these measures as applied to a factory produced 
following result : "In October, 184& his firm employed 600 laborers, of 
whom 200 were less than 13 years old. In October, 1852, they employed only 
350 laborers, of whom only 50 were less than 13 years old. The same number 
of machines, with very few exceptinos were in operation, and the same 
amounts were paid in wages, in both years . . ." 

While this seems like throwing into unemployment a large proportion of 
men, an economist takes a view that : "According to the degree of this 
expansion the capitalist will be enabled to employ a part of his former 
laborers under the new conditions, and eventually all of them or more, in 
other words, they will be enabled to produce the same or a greater mass of 
profits." (Capital, Vol. Ill, p. 271.) 

81 See British Reconstruction Committee Interim Report on Electric Power 
Supply in Great Britain, 1917. 

88 "The amplest application of motor powers and the best machinery and 
implements, the utmost subdivision of labor, and the most efficient combina- 
tions of labor-power will carry production to such pitch that the hours of 
work can be materially reduced in the production of the necessaries of life. 
Among the motor powers that are coming into application, electricity will, 
according to all appearances, take a decisive place. Capitalist society is now 
everywhere engaged in harnessing it to its service. The more extensively 
this is done the better. The revolutionising effect of this mightiest of all 
powers of Nature will but all the sooner snap the bonds of society and 
open the door to Socialism. But only in the future society will electricity 
attain its fullest and most widespread application." — A. Bebel — op. Cit. 

83 J. W. Ledoux, Presidential Address, Proceedings of the Engineers 
Club of Philadelphia, Volume XXXIII No. 2, Paper 1161. 

**H. L. Gantt — Training workmen in Habits of Industry, and Cooperation 
— Transactions, The American Society of Mechanical Engineers, Volume 30, 
page 1637. 

"Industrial Leadership — H. L. Gantt — Page 53. 

88 A. Mitchell Palmer, Alien Property Custodian in Philadelphia Speech, 
November 3, 1918. 

OT Ch. Ferguson in Stevens Indicator. Vol. XXXIV, No. 1, 1917. 

"The Carnegie Foundation for the Advancement of Teaching, Bulletin 
No. 11 by Charles R. Mann, 1918, pages 107-8. 

"Sidney Webb— The Works Manager To-day— New York, 1917. 

40 Compare it with triple formula of organized workmen : 



44© 

"First: That work shall overtax none. 

"Third: That work shall be as productive as possible." 
41 See Journal of The American Society of Mechanical Engineers, authors 
discussion. 

88 James L. Cowles— Postal Plan. G. P. Putnam's Sons, 1905. 

43 The Location of Power Plants by I. M. Kearns of the Boston Edison 
Company. 

"Discussion of I. Moultrop's paper on Modern Central Station Design 
by Mr. G. H. Stott. 

44 Report on Electric Power Situation in the Philadelphia District to the 
Emergency Fleet Corporation, U. S. Shipping Board by Walter N. Polakov. 

"The Barton Power Scheme — The Electrical Review, Jan. 8, 1915. 
"The Interborough Rapid Transit Company, 74th Street Station, New 
York. 

47 R. J. S. Pigott — Graphic Method of Analysis in The Design and Opera- 
tion of Steam Power Plants — Transactions, The American Society of Mechan- 
ical Engineers, Volume 38, page 6870. 

48 R. H. Smith — Commercial Economy in Steam and Other Thermal 
Power Plants. Chapter VIII London, A. Constable & Co., Ltd., 1905. 

"Ibidem. 

M Transactions, American Institute of Electrical Engineers, Volume II, 
page 1619. 

81 See also Wm. Kent "Bookkeeping and Cost Accounting for Factories," 
pages 208-12 and Leafax, 30, Power Plants 1 ; 7-14, January, 1917. 

13 Prof. Thorstein Veblen — The Modern Point of View and the New 
Order. 

18 W. C. Mitchell— History of The Greenback— Page 390. 

"Commercial Economy in Steam Power Plants, A. Constable & Co., Lon- 
don, 1905 — Pages 3 and 4. 

" Ch. Ferguson, Stevens Indicator, Volume XXXIV, No. 1, 1917. 

"See The Evening Sun (New York) Dec. 4, 1918. 

SI Since the coal operators assumed more independent attitude and 
generally refuse to sell coal on specifications or with any penalties. 

"City Record (New York) 1910, also Report on Preventable Wastes 
and Losses in the Power and Heating Plants of the Municipal Government 
of New York City, No. 1, Dept. of Water Supply, Sept 16, 1909, and 
Feb. 10, 1909. 

** See Preface to French Edition of Taylor's Shop Management. 

"Interesting, though as yet singular resolution was adopted by British 
Engineers : ". . . this, like most other questions, must ultimately be settled 
in accord with the common interest, and believing as we do in the wisdom 
contained in the utterance of the late Lord Derby that 'the greatest of all 
interests is peace/ we are willing to leave the matter to the arbitrament of 
a public and impartial authority, aided by technical knowledge from each 
side." — Amalgamated Society of Engineers, 46th Annual Report, London, 1897, 
page VII. 

91 Louis D. Brandeis said: "Labor must have throughout an opportunity 
of testing whether it is the whole truth. Labor must not only be convinced 
of the industrial truths — which scientific management is disclosing — but must 
also be convinced that those truths are consistent with what may be termed 
human truths. Is the greater productivity attained clearly consistent with 



441 

the health of the body, the mind, and the soul ot the worker? Is it consistent 
with industrial freedom? Is it consistent with greater joy in work, and 
generally living? These are questions which must be answered in the affirma- 
tive, and to the satisfaction, not of a few, merely, but of the majority of 
those to be affected." Taylor Memorial Meeting, Philadelphia, Pa., 1915. 

M Count Okuma, one of the shrewdest statesman of Japan. 

88 Lord Leverhulme, noted English manufacturer, worked out from his 
experience a formula which he puts in these words : "Labor plus capital 
minus good management means failure. Labor plus good management minus 
capital may spell success." 

84 See — Labour and The New Social Order by Arthur Henderson, M.P. 

88 Quoted from January, 1919, issue of "Reconstruction." 

87 We also occasionally hear of workmen willingly extending their working 
day by insisting on overtime work. This, obviously is not due to lack of 
desire to get home early, but to a^iWcessity to bring the income in balance 
with ever increasing cost of living. 

88 The Works Manager To-day, page 15, chapter 11 — Sidney Webb. New 
York, Longmans, Green and Co., 1917. 

"Reproduced from Ch. S. Myers, M.D., Sc. Di., F.R.S. 

76 In Belgium, Russia, and other countries where Ministries of Public 
Education studied the fatigue of school children, the week is broken on 
Thursday and afternoon is given as a holiday to promote the good work. 

71 News item : "Motormen of Westchester Railway Company went on 
strike demanding increase of wages from $300 to $350 per month, making 
their pay equal to this of locomotive drivers." Compare this with an adver- 
tisement in Mechanical Engineering, The Journal of The American Society 
of Mechanical Engineers, August, 1919 : "Assistant Professor experienced 
in teaching mechanical or electrical engineering subjects. Location California; 
salary $2,000 per year," and "Detail Draftsman : young man with good train- 
ing and shop experience preferably one capable of making sketches and 
details from machined parts of automatic book-binding machinery. Location 
Westchester County; salary $30 per week." Compare $4,200 of motorman 
with $2,000 of professor and $1,560 of draftsman and reflect . . . 

72 Washington, June 3 — "Coal needs this year will be 100,000,000 tons in 
excess of production" — News item. 

Also see author's Grave Danger of Fuel Famine, page 276, Industrial Man- 
agement, May, 1917, and Open Letter to Secretary Lane in September, 1919, 
Industrial Management. 

n See also "Capital" Vol. Ill by K. Marx, 1909, C. Kerr, Chicago, pages 
15 to 120. 

""While the constitution (English) had increasingly taken on Democratic 
forms the reality underlying those forms has been increasingly plutocratic" — 
Cardinal Bourne. De te fabula narraturl 

78 "After the researches of Quetelet in Brussels, Farr in London, Schwabe 
in Berlin, Villerme and Benoison de Chateaneuf in Paris, it is no longer 
possible to doubt that the maximum of birth takes place among the poorer 
class, and that poverty itself is an irresistible inducement to an abundant 
and disordered birth rate." "The long working days of 12 hours make their 
intellectual improvement impossible, and compel them to seek their sole 
enjoyment in those of the senses . . . persuaded that no endeavor will 
better their condition, they are necessarily impelled to a great fecundity." 
F. Nitti "Population and the Social System." London, 1894, pages 153, etc. 



442 

™"It is not the lowest, but the highest-paid labor, with scientific manage- 
ment and machinery, which gives cheapest products." Andrew Carnegie. 

77 The same situation apparently prevails in England : "The workers . . . 
subjected sometimes to irritating mismanagement and anxious about the future, 
tend to be political leaders. They (workers) too are questioning the whole 
system of society." — Cardinal Bourne. Also see the President's Mediation 
Commission Report. 

78 "Standards that fail to distinguish between personal and material and 
that ignore the sacredness of human life, are without meaning as factors in 
the ultimate solution of industrial problems." Hon. W. L. Mankenzie King 
in Industry and Humanity, Boston, 1918, page 83. 

79 Mr. F. Gilbreth proved by his chronocyclegraph that a well-educated 
executive wastes less motion, learns quicker, and works with greater precision 
at unfamiliar operations than an operative who has not had the advantage 
of well-balanced education. 

80 The Globe and Commercial Advertiser (New York), Nov. 4, 1918. "In 
order to discover what relation undernourishment bore to poor work in 
school, all the children were weighed once a month. In rating the children 
as normal or underweight for their age, the chart of measurement and weight 
found in the Ninth Year Book of the National Society for the Study of 
Education, Part 1, Health and Education by Thomas Denison Wood, A.M., 
M.D., 1910, was used. One thousand one hundred and seventy children were 
classified and their weight record was compared with their class standing 
at the end of May. There were 825 pupils rated as normal, 70 per cent of 
the school; 345 were underweight, 30 per cent of the school. 'The under- 
weights,' says the report, though forming 30 per cent of the school gave 
but 27 per cent of the successful pupils at the end of May, yet they provided 
43 per cent of those who had not done satisfactory work. The 70 per cent 
of normal children gave but 56 per cent of the failures. Taking the normal 
child as a class by themselves, 88 per cent had done satisfactory work, and 
12 per cent had a poor rating, while 22 per cent of the underweight children 
were rated as unsatisfactory. In other words, the underweight child has 
almost twice as many chances of failure as the normal child." 

Also in New York Times, August 4th, 1919, we read: "From 3,000,000 
to 6,000,000 American children are not getting enough to eat because their 
parents are unable on their present incomes to buy sufficient food, said a 
statement issued to-day by the Children's Bureau of the Department of Labor. 
These are the children, the statement said, who are often pronouncd by parents 
and teachers 'delicate,' 'ailing,' 'lazy,' or just 'plain ornery,' although their 
true affliction is malnutrition. 

"The number of school children in the United States who are not getting 
sufficient food was placed at from 15 to 25 per cent, while this was said to 
be true of one-fifth of the children attending school in New York City." 

81 Quoted from the Presidential Address, The American Society of Mechan- 
ical Engineers, December, 1918. 

82 Cardinal Bourne, Archbishop of Westminster, said in his pastoral letter 
of February 10th, 1918: "The effect of competition uncontrolled by morals 
has been to segregate more and more the capitalist from the wage-earning 
class and to form the latter into a proletariat, a people owning nothing but 
their labor power." 

88 "Paris, March 31st, 1919. The commission on international labor legisla- 



443 

tion has concluded its report and has drafted nine clauses for insertion in the 
treaty of peace . . . 'Every worker has a right to a wage adequate to 
maintain a reasonable standard of life, having regard to the civilization of 
his time and country . . . 

" 'A weekly rest, including Sunday or its equivalent for all workers ... 

" 'Limitation of hours of work in industry on a basis of eight hours a day 
or forty-eight hours a week . . .' " From London Times — Public Ledger. 

"Adam Smith "Wealth of Nations," London, 1776. 

85 Federalist, LXXXIX, London. 

89 In 1894 Trade Unions with 573,000 total membership insisted on piece 
work, 140,000 recognized piece work (713,000 members) and only 290,000 
insisted on time work; this chiefly because of the nature of the work, such 
as Amalgamated Society of Engineers. See S. & B. Webb "Industrial 
Democracy." 

87 David Lloyd George's apology^ to* medical examiners confirmed that half 
of the British recruits became physically unfit under the prevailing condi- 
tions of industrial employment. In the United States about 25 per cent of 
drafted soldiers were illiterate. 

88 "Principles of Economics," 3d Edit. London, 1895, Book IV, Chap. VII, 
page 311. 

89 This principle was recently recognized also by some progressive man- 
agers of other industries. The quality of work can easily be made a basis 
for extra compensation over and above guaranteed wage for motormen, bakers, 
chemical workers, papermakers, gas producers, etc. 

90 Cardinal Bourne, quoted before, said : "During the war the mind of 
the people has been profoundly altered. Dull acquiescence in social injustice 
has given way to active discontent. The very foundation of political and 
social life — our economic system being sharply scrutinized, and this not only 
by a few writers and speakers, but by a very large number of people in every 
class of life, especially among workers." New York Times — Feb. 10, 1918. 

91 Profit sharing and Labor Co-partnership in the United Kingdom. 1912. 
92 Authority: "Profit Sharing" H. P. Kendall and others, Harper & Bros. 

1918. 

98 A. W. Burritt and others, Profit Sharing, etc., page 174. 

"Existing practice of the T. A. & S. Fe may further be illustrated by the 
following standard schedule: 

POWER PLANT OPERATION 

Standard Schedule 

Shops 

For efficient and economical performance in the operation of Power Plant 

at bonus will be paid monthly to the Power Plant Employes 

according to efficiency determined by the following factors: 

Item Standard Rel. Val. 

1 — Pounds of coal per boiler hour (per twelve 

months average) 6 

2 — Hours labor per boiler hour (monthly actual) 4 

The amount of fuel delivered to the Power Plant, as shown on Storekeeper's 
records, is considered as the fuel consumption for the period considered. 

The amount of labor is to be the total hours employed in supervision and 



444 

operation of the Power Plant, including the handling place and keeping 
Power Plant and surroundings in proper condition. 

Boiler hours to be total hours boilers are in actual operation during the 
period considered. 

This schedule is based on coal, and if other fuel is used 

the equivalent value is as follows: 

1 Ton equivalent to tons 

2 Ton equivalent to tons 

3 Ton equivalent to tons 

The average efficiency is determined by multiplying the efficiency attained 
on items (1) and (2) by their relative values, dividing the sum of their 
products by 10. 

This schedule further provides that the cost of (three months average) 
all repairs (labor and material) to all machinery in the engine and boiler 
room, and all supplies such as oil, waste, etc., be maintained monthly for 



For each one per cent the average cost is below this figure, 1 per cent 
of the bonus earned by the engineers in items (1) and (2) will be added and 
will be apportioned as follows : 60 per cent to the Chief Engineer and 40 
per cent divided among the other engineers according to the wages earned. 

,s See National Engineer, September, 1919, discussion of Two-rate Wage. 

"Described in Power, April 2nd, 1918. 

• 7 Described in A. E. R. A., February, 1918. 

* s Address before Taylor Society at Annual Meeting, N. Y., Dec. 8-9, 1916, 
also Transactions, The American Society of Mechanical Engineers, Volume 
35, page 359, paragraph 30. 

H The results of two and one-half years of practicing this plan claim 18.5 
per cent fuel saving but only 50 per cent of it, i. e., 9.25 per cent is "due to 
the efforts of the employees," the rest of the saving being brought about 
through physical improvements. These meager results (the present saving 
in fuel cost is 8.75 per cent) are nevertheless higher than some of the 
plants adopting reward-payment based on similar misconception, can claim. 

1M See Commerce Monthly, June, 1920, article The Normal Business Cycle. 

1,1 In Industrial Management for April and July, 1918, Electrical World 
for January 5th, 1918 and in Transactions of The American Society of 
Mechanical Engineers for 1913. 

102 Pennsylvania Electric Association — Eighth Annual Convention, Bedford 
Springs, Pa.— Sept. 8-10, 1915. 

1,8 T. A. P. & P. L— Spring Meeting, Dayton, Ohio. May, 1918— also 
"Paper," Volume 11. — Addresses by G. Williams and W. N. Polakov. 

144 The first requisite toward effective fuel economy is to secure coopera- 
tion between owners, managers, and the men who fire the coal. Mechanical 
devices to increase efficiency in the use of coal can not produce satisfactory 
results unless the operators who handle them are impressed with the impor- 
tance of their duties." Secretary Lane's Annual Report, 1919. 

" B Machinery versus Trained Brains — Industrial Management, Sept., 1919. 
1,4 "It is not essential for the plant manager to be a fuel expert (for he 
can always secure services of a recognized consulting engineer), but he 
should be familiar with the instruments that give a check on the daily opera- 
tions. It is a mistake not to provide proper instruments, for they guide the 



445 

firemen and show the management what has taken place daily. Instruments 
provided for the boiler room manifest the interest taken by the management 
toward conserving fuel. It indicates cooperation and encourages the firemen 
to work ... to increase the efficiency." Report of the Secretary of the 
Interior, 1919, page 10. 

107 From a paper before the American Boiler Manufacturer's Association, 
Buffalo, N. Y., 1919. 

108 See G. H. Barrus Boiler Tests, New York, D. Van Nostrand, 1900. 

109 Since this was written D. V. Merrick published in his book Time 
Studies for Rate Making complete instruction cards on unloading soft coal, 
Figures 68 and 69 on page 20>5. 

n0 Transactions, The American Society of Mechanical Engineers, Vol. 35, 
pages 353, 354. 

111 At Dayton, Ohio, May 16, 1918. / 

112 A. F. Graves — November, 1917, issUe-of Strathmorean. 

113 New York Central Railroad Company, September 21st, 1916. 

114 See "Commercial Steam Power Economy," by R. H. Smith, London, 
1905. 

115 Says the London Economist : "Any attempt to achieve full efficiency 
in production and distribution which does not have as its paramount aim the 
cheapening of the product to the consumer will fail, and deservedly fail, 
through the revolt of the consumer." 

118 Testimony of H. L. Gantt on Cost of News Print, 1917, before Federal 
Trade Com. 

111 Industrial Management, Nov., 1918, page 397. 

118 Page lecture series, Sheffield Scientific School, Yale University, 1915. 
By H. L. Gantt. 

u9 Wm. Kent, "Cost Accounting." Lefax data." G. Ch. Harrison — 
Accountancy to Aid Production, etc. 

120 H. G. Stott of the Interborough Rapid Transit Company, N. Y., in 
discussion of T. E. Moutrop's paper (Proceedings, American Institute of 
Electrical Engineers), "Modern Central Station Design" said: "59 per cent 
of the machinery in a lighting plant operates only 300 hours per annum, so 
that it becomes most important to keep down the first cost, for assuming that 
a plant cost $125 per kilowatt capacity then the interest and depreciation 
charges upon the portion of it used for peak load would amount to 5.2 cents 
per kilowatt hour, or probably five times as much as the operating cost." 

m Independent Operation: 
Full output of 13,300,000 kilowatt hours @ 2.7 pounds = 35,910,000 pounds 

of coal. 

Parallel Operation: 

Fractional load 10,000,000 kilowatt hours @ 3.5 pounds = 35,000,000 pounds 
Fract. purchased 3,300,000 kilowatt hours @ 2.1 pounds = 6,930,000 pounds 



Total coal 41,930,000 pounds 
Independent operation 35,910,000 pounds 



Waste of coal 6,020,000 pounds 
To make parallel operation equally conservative in coal consumption 3,300,000 



446 

kilowatt hours must be generated with only 910,000 pounds of coal, this 
of course cannot be done by the public utility company. 

133 Electric Railway Journal, Dec. 18th, 1915, etc. 
"'Acknowledgment hereby is made to Prince E. Lasarovich who assisted 

the author in compilation some of the data used in this chapter. 

134 "About two-thirds of the coal consumed in the United States goes into 
the production of power which is divided almost equally between the industries 
and the transportation systems; about one-sixth is used as a raw material for 
making substances employed indutrially, such as metallurgical coke . . . 
One-sixth approximately is employed for heating homes and other buildings." 
Bulletin No. 102, U. S. National Museum, part 4, page 6. 

136 The unfinished products of coal tar industry alone include nine principal 
groups: (1) Dyes, (2) Color lakes, (3) Photographic developers, (4) 
Medicinals, (5) Flavors, (6) Perfumes, (7) Penolic Resins, (8) Tanning 
materials, (9) Explosives. 

To mention a few best known: alizarin, indigo (synthetic) creosote, naph- 
thalene, benzol, toluol, tylol, benzoate of soda, salycilic acid, aspirin, acetanilid, 
antipyrine, salol, saccharin, carbolic acid, pyrogallol, rhodinol, methyl, aceto- 
phenon and other perfumes. 

Due to the undeveloped state of this industry in the United States until 
very recently we entirely depended on imported intermediates. 

Dye Production of the World 

From Coal By-Products 

(From United States Tariff Commission Report No. 11) 

1 Germany $68,300,000 

2 Switzerland „ 6,450,000 

3 Great Britain 6,000,000 

4 France 5,000,000 

5 United States 3,000,000 

6 Austria 1,500,000 

7 Russia 1,000,000 

8 Belgium 500,000 

9 Netherland 200,000 

10 Other countries 200,000 

Total $92,150,000 

Conditions before the war as given by T. H. Norton, Dept. of Commerce, 
Spec. Agents Series No. 96, page 30. 

139 Messrs. Ramsburg and Sperr presented in a paper before a meeting in 
1917 of The American Society of Mechanical Engineers the following calcula- 
tions in reference to coke making alone: 

By-Product Yields from Coal Such As Is Now Used to Make First- 
Class By-product Coke in the Middle States District 
Per Ton of Coke Made 
85 Per Cent High-Volatile, 15 Per Cent Low-Volatile 

Fuel- Value Equivalent, 
lb. of Coal 
Surplus gas. 9,000 cu. ft., 550 B. t. u. per cu. ft. 

Used as fuel 350 



447 

Fuel Value Equivalent 
lb. of Coal 

Tar. 12 gallons. Used to make Creosote oil, pitch, 

lampblack, various oils nad dye materials 133 

Ammonium Sulphate. 33 lb. (or, 

To make 1 ton of in form of 25 per cent ammonia 

Furnace Coke, 1.4 liquor, 33 lb.). Used for fertilizer, (No fuel equivalent) 

to 1.5 tons Coal for refrigeration, and for nitric 

are required. acid and other chemical manu- 

factures. 

By beehive coking, Benzols (as light oil) 4.5 gallons. 

the by-products Used for explosive bases, motor 

wasted have a fuel fuel, dye-material bases, phenol 

value equivalent to and other chemical manufacture, 

625 lb. of coal. and as a solveritrand cleanser 42 

Coke Breeze. 120 pounds. Used 

as fuel 100 

Total 625 

Add coal equivalent wasted in beehive oven 200 

Total economy of by-product oven per ton coke 825 

This table shows a total fuel saving of 825 pounds of coal per ton of 
furnace coke. The fuel value of the gas is put as against raw coal, B. t. u. for 
B. t. u. There is a further saving in the blast furnace of 200 pounds of 
coke per ton of beehive coke formerly used. Figured back on a coal basis, 
these 200 pounds of coke represent 282^4 pounds of coal at the beehive oven, 
so that the total saving amounts to approximately 1,100 pounds of coal — 0.55 
ton — for each ton of by-product coke made in the modern plant. Since the 
ovens added from January 1, 1915, to 1918 will produce practically 16,200,000 
tons of coke per annum, it follows that they will save annually the fuel 
equivalent of 9,000,000 tons of coal. 

iaT In the legal opinion of Louis D. Brandeis July 10, 1913, he said: "The 
mere fact that in the case of the wholesale customer for electric energy the 
public srvice company would be exposed to the competition of a possible 
isolated plant ; whereas in the case of the retail customer there is no possibility 
of his supplying himself, does not afford any legal justification for difference 
in charge. In other words, the possibility of competition is not to be taken 
into consideration in determining the reasonableness of the classification." 

188 In this regard the formula given by Professor Arno may be mentioned. 
The complex load consists of true and apparent power. 

"• Director of Bureau of Mines estimates the life of available oil supply 
between 20 and 25 years. 



INDEX 



Accidents, due to fatigue, 1 72 

industrial, 70 

lack of space, 66 

poor lay-out, 66 
Accumulation of material, 1 74 
Acquiring knowledge, 246 
Acquisition of superior skill, 247 
Aim of production profit, 220 
Aims of Labor, 145 
Alford, L. P., 276 
Analysis of records, 316-318 
Arrangement of equipment, 68 
A.S.M.E., code for conducting boiler 
trials, 239 

transfer of skill, 248 
Attitude of employees, 165 
Ability of employees, 184 
Autocracy and Democracy, 139 
Autographic records, 286 
Automatic records, 284 
Autonomous cooperation, 140 
Avoidable losses, 227 

Bacon, Francis, 221 
Basis of wages, 189 
Bebel, A., 178 
Bill for electric service, 418 
Bituminous coal, 408 
Boilers, testing, 240 
Bonus system, 182-258-269 

desire for, 182-3 

quality bonus, 294 

success of, 274 
By-products of coal, 97 

Calculating board, facing 310 
Calculation of records, 309-310 
Capabilities, 72 
Capitalization of waste, 94 
Care of equipment, 114 

material, 114 
Causes of low efficiency, 127 
Carnegie, Andrew, 333 



Centralization of operation, 66 

of plant, 52 
Characteristic of electric power, 422 

equipment, 70 
Cheap power, 210 
Children, employment of, 177 
Classification of expenses, 361 

material, 120 
Coal, by-products, 97 

cost of coal, 347 

determination of value, 113 

for railroads, 412 

handling of refuse, 65 

knowledge of, 105 

percentage of ash, iio-iii 

price, efficiency of, 106-7-8-9 

production of coal and coke, 399 

quantity to be stored, 116 

sale of, 100 

saving of coal, 263-4 

selection of, 103 

storage of, 65, 116 

unloading and handling, 65 

Utilization, 407-8, 320, 321 

value of, 98, 152 

waste of, 94-98, 414 

weighing of, 284-5 
Collecting data, 290-297 

necessary information, 284 
Common faults of arrangement, 68 
Compactness of plant, 67 
Compensating labor, 189 
Competition, 421 
Complete and clear records, 279 
Conservation requirement upon loca* 

tion, 47 
Construction records, 306 
Consumption of oil in U. S., 393 
Continuity of records, 278 
Cooperation between operating and 
maintenance forces, 136 

of central stations, 406 
Cooperative labor, 189 



45© 



Cost and expenses, 329 

analysis, 334 

comparison, 369 

idleness, 89, 91, 353, 356, 357 

-keeping-function, 366-332 

of coal, 107-8, 349 

manufacturing power, 340 
purchased power, 386 
service theory, 415 

system, 352 

Daily logs, 299-300 
Data, analyzing, 308 

collecting, 290 

for service records, 304 

methods of presenting, 287 

operating, 308 

using, 324 
Daw, Alexander, 418 
Demand indicator, 419 
Democracy and Autocracy, 139 
Depreciation of efficiency, 120-123 
Descriptive presentation of facts, 287 
Determination of costs, 340 
Details of operating expenses, 378 
Determination of wages, 188-331 
Devices, new mechanical, 252 
Diagram of economy, 71 
Dickerman, Mr., 417 
Display record, 289 
Distinction between upkeep and repair, 

119 
Distribution of power, 302 
Distributive use of coal, 393 
Dumping, 83, 84 

Economy, 343~4 

coefficient, 76 

diagram, 71 

economic conception, 74 

individual conception, 339 

in labor, 177 

of equipment, 76 

production, 76 

on wages, 338 

operating, 79 

social conception, 339 
Education of employees, 184 
Effect of losses, 283 
Effects of fatigue, on industry, 168 

on economy, 168 



Efficiency, causes of lower, 127 

and cost, 338 

depreciation, 1 20-1-2-3 

increased, 156-178 

of coal, 106 
Electric power, 58 

characteristic, 422 

sale of, 415 
Electrical energy, 405 
Electricity, 394 
Electrified railroad, 391 
Elimination of waste, 332-3 
Employees, ability and peculiarities, 184 

attitude of, 165 

environment, 185 

qualification, 159-63 

selection, 159 

training and education, 184 

training of, 184-253-160-161-2 
Employment of children, 177 
Engineering, definition, 179 

position of an engineer, 179 
Environment of employees, 185 
Equipment, arrangement, 66-68 

capabilities of, 72 

care of, 114 

characteristic of, 70 

efficiency of, 71 

idleness, 1 55-317-18, 357 

inspection, 134 

instrument, 230 

maintaining equipment in first- 
class operating condition, 262 

purchase of, 101 

relocation, 69 

repair, 119 

scattering of, 68-69 

selection of, 72 

suitability, 101 

upkeep, 118 

utilization chart, 317 

visibility of, 65 
Erection of plant, 55 
Examples of plant sites, 57 
Expenses, analysis, 327-372 

administration, 335-362 

and cost, 329 

auxiliary, 362 

classification, 361 

expenditure of money, 327 

fixed, 416 



45i 



Expenses, non-productive, 361 
of idleness, 89-91-353-356 
of waste, 331 
operating, 362 
productive, 361 
statement, 373-4 
variable, 416 

Failure of management, 256-7 
Fatigue, 167 

economy, 169 

industry, 168 

origin, 168 

reduction and elimination, 172 
Faults of arrangement, 68 
Ferguson, Chas., 90 
First aid facilities, 67 
Fixed charges, 82 

expenses, 416 
Ford, Henry, 333 
Formative period,, 422 
Frey, J. P., 141 
Fuel, economy, 217 

report to fuel agent, 315 

saving due to intelligent use of 
instruments, 232 

shortage of, 176 

utilization, 176-177 

chart, 318-19, 20, 21 

waste of fuel, 35, 39, 41, 278 
Function of cost keeping, 332 

records, 290 

Gantt, H. L., self government of shops, 
140 

man record chart, 207 
Garland, C. M., 411 
Generation of power, 402 
Gorsuch, W. S., 342 
Graphic analysis of performance, 72-73 

records, 350-287 
Grinevetsky, Prof., 73-80-1-2 
Grouping of units, 66 

Haldane, Viscount, 217 
Handling of coal, 65 

material, 116 

refuse, 65 
Harrison, G. Charter, 332 
Historical review of power, 393 
Hollerith card, 312 



Hopkinson, Dr. John, 417 

Human factor, 238 

Hygiene and comfort of employees, 67 

Idle capacity, 86-88 

expense, 89-91 
Idleness of equipment, 155, 317-318 
Immediate records, 278 
Improvement, methods of manage- 
ment, 164-5 

in power, 177 
Inadequacy of distribution, 421 
Incomplete records, 280 
Incorrect records, 279 
Incentive payments, 193 

Features of, 208 

Consequences, 208-9 
Increasing output of plant, 333 
Individual conception of economy, 339 
Industrial revolution, 42 1 

system, 210 
Inefficiency, cause, 155 

elimination of, 156 
Inelasticity of credit, 421 
Information, collecting, 284 

transmitting, 244 
Inspection of equipment, 134 

route card, 127 
Instruction cards, 244 

card for coal passers, 254 

firemen, 250 
Instruments, arrangement, 234 

equipment, 230 

groups of, 233 

location, 234 

testing, 133 

use of, 225 
Integrating instrument records, 286 
Intermittent records, 281 
Interruption of service, 302 
Investigation, 229-30 
Isolated plants, 404-56 

Jacobus, D. S., 238 

Keeping machines' time, 296 

men's time, 291 
Keir, Prof. Malcolm, 248 
Kilowatt hour meter, 419 
Knowledge, acquiring, 246 

of coal, 105 



452 



Knowledge, presentation, 243 
securing, 236 

Labor, aims, 145 

army, 155 

compensating labor, 189 

cooperative, 173 

power, 189 

problems, Economic Aspect, 187-8 
Efficiency up to operators, 181 
Human factor, 238 
Social aspect, 1 86-7 

productivity of, 158-178 

Slave labor, 187-8 

Universal, 173 

values of laboring power, 212 
Labor-saving machinery, 177 
Lack of confidence, 231 

space, 66 

time, 231 

training, 231 
Lane, Franklin K., 277, 422 
Lay-out of plant, 66 
Lazarovitch-Hrebelianovitch, 226 
Leverhulme, Lord, 166 
Load factor, 419 

-influence on economy, 71, 74 
Location, conservation requirement, 47 

of plant, 60-61 

Service requirement, 46 
Log-Keeping, 299-301 

calculator, 311 

Daily performance, 299 

figuring out, 301 

form, 300 

filing of, 301 

object, 300 
Losses, avoidable, 227 

causes, 160 

effect of losses, 283 

of material, 93 

power resources, 415 

time, 163 

remedy, 160 

unavoidable, 228 

Machinery, labor-saving, 177 
Man record chart 259-207 
Management, failure of, 256-7 
mismanagement, 152 



Management of power production, 392 

science of, 216 
Manual records, 284 
Manufacture of power, 392 
Manufacturing power cost, 340 
Maintenance, effect of poor, 136 

expenses, 362 

mechanism, 131 

record card, 135 

requirements, 126 

schedule, 128-9-30 
Marshall, Prof. A., 192 
Mastering processes, results of, 262 
Materials, accumulation, 174 

as marketable commodities, 93 
products of labor, 93 

care of, 114 

classification, 120 

handling, 116 

loss due to lack of knowledge, 114 

loss of, 93 

prices vs. value, 102 

purchase of material, 99 

raw, 115 

unsuitable, 99 

waste of, 114 
Maximum commercial economy, 73 

demand, 417 
Measurement of maximum demand, 

418 
Mechanical devices, 252 
Method, 252-3 
Mode of production, 139 
Monthly expense statement, 373-4 
Motion studies, 242 
Multiple Production, 408-9 

Non-productive expense, 361 
Non-use, 86, 91, 98 
Numerical records, 287 

Observations recorded in handwriting, 
284 

Operating data, 298-9 

Operation, changes in, 183 
operating economy, 79 

expenses, 378-362 
standard-cost, 347-9 
Way to accomplish, 183-4 

Origin of fatigue, 168 

Output of plant increasing, 333 



453 



Over-equipment, 354 
Overhead expenses, lowest with maxi- 
mum output, 78 
Overproduction, 210 

Peculiarities of employees, 184 
Person, Prof. 148 
Petrunkevitch, A., 181 
Plants, centralization of, 52 

compactness, 67 

equipment of, 64 

erection of, 55 

isolated, 404-56 

layout, 64-65 

location, 60-61 

sites, 57-62 
Position of an Engineer, 179 
Postal Plan, 419 
Power, as commodity, 391 

cheap power, 210 

cost analysis, 377 

distribution of, 302 

effect of cheap, 54-55 

electric, 58-397 

for central light and power sta- 
tions, 394 
railroads, 392 

historical review, 393 

industry, 21 

power factor, 419 

primary power, 397 

production, 277-174 

prospective, 404 

purchased power-cost, 386 

sale of power, 415 

sources of electric, 58-59 

supply, 414 

water, 402-398 
Predetermination of costs, 340-2 
Premium Plans, 200 
Presenting Data, 287 
Prices vs. Use of Material, 102 

Coal, 96 

Material, 102 
Principle of equality, 180 
Private ownership-abolition, 331 
Processes, mastering, 262 

scientific method, 223 

unscientific method, 222 
Production, increased, 150 

mode, 139 



Production of coal and coke, 399 

power, 174 

overproduction, 210 

profit — Aim of production, 220 - 
Productive expenses, 361 
Products of labor, Material, 99 
Profit-Sharing, 196-214 
Progress due to training, 256 
Promised saving and actual costs, 387 
Prospective review, 404 
Protection, Use of goggles, 68 
Purchase of equipment, 101 

material, 99 

Qualification of employees, 159 
Quality bonus, 294 
Quantity of coal to be stored, 116 
task, 294 

Ratenau, Walther, 166 
Raw material, 115 
Recording working time, 291 

analysis of records, 316-308 

calculation of records, 309-10 

construction records, 306 
Records, autographic, 286 

automatic, 284 

calculation of, 309 

classification, 281 

complete and clear, 279 

continuity of, 278 

delayed, 280 

display record, 289 

function of, 281 
plant, 290 

graphic, 287 

immediate, 278 

incomplete, 279 

incorrect, 279 

integrating instrument, 286 

intermittent, 281 

manual, 284 

numerical, 287 

presentation of, 315 

purpose, 277 

record of coal weighed, 285 

service records, 302 
Reduction of fatigue, 172 
Relation — efficiency and cost, 338 
Relocation of equipment, 69 
Remedy of losses, 160 



454 



Repair of equipment, 119 
Report to Fuel agent, 315 
Reports of new business dept., 69 
Requirements for mastering mainten- 
ance, 126 
Revolution — industrial, 421 
Right to be lazy, 152-3 
Roux, G., 336 

Rewarding according to service ren- 
dered, 327 

fallacies, 214 

individual efforts, 204-14 
Relation of production and cost, 333 

Safety arrangements, 67 
Sale of coal, 103 

power, 415 

schedules, 415 
Saving of coal, 263-4 

fuel, 232 

time, 306-7 
Scattering of equipment, 68-69 
Schaller, W. F., 359 
Schedule of maintenance work, 128 
Scholl, J. C, 270 
Science of management, 152 
Scientific Method, 223 

methods of coal mining, 421 
Secondary wage rate, 194 
Selection of coal, 103 

employees, 159 

equipment, 72 
Self-government of shops, 140 
Service, character of, 304 

interruption of, 302-4 

records, 302 

requirements upon location, 46 
Sheffield Scientific School, 224 
Shortage of fuel, 176 
Sites of plants, 57-62 
Skill — acquisition of superior, 249 
Skill Utilization chart, 322-3 
Slave labor, 187-8 
Smith, R. H., 72-3 
Social aspect on labor problems, 186-7 

conception of economy, 339 
Source of electric power, 58-59 
Standard operating cost, 347-9 
Standardization of power plant costs, 

340 
Steps in investigation, 229 



Storage of coal, 65 

Stott, cost equation, 342, 366-74 

Steinmetz, Chas. P., 413 

Strathmore Paper Co., 313-218 

Stuart, C. E., 402 

Suitability of equipment, 101 

Tariff system, 420 

Task of Mastering Power Production, 

328 
Tasks, 256 
Testing boilers, 240 

of instruments, 133 
Thermal efficiency and economy, 71 
Thermodynamic perfection, 70, 74 
Thurston, Dr. R. H., 219 
Time factor, 75-76 

losses, 163 

measurement, 291 

saving, 306-307 

studies, 242 
Taylor, Frederick W., 255 

Shop Management, 163 

Religion of Work, 152 
Training of employees, 253-184 
Transfer of skill, 248-252 
Transformer Losses, 335 
Transmitting information, 244 
Transportation, facilities, 51 

dissimilarities, 58 

requirements, 55 
Tryon, U. S. Geological Survey, 406 
Two-rate wages, 206 

consequences, 218 

effect on cost of living, 215 

incentive payments, 193 

principles of, 215 

reduction of, 258 

studies of, 215 

Unavoidable losses, 228 
Unemployment, 157-158 
Unit variation, 336 
U. S. Fuel Administration, 309 
Universal labor, 173 
Unloading of coal, 65 
Unmeasured charges, 415 
Unscientific method, 222 
Upkeep of equipment, 119 
Use of instruments, 232-225 



455 



Use of records and data, 325-6 

Uses of electricity, 394 

Utilization of fuel, 176-7 

Utilizing power, imperfect methods, 392 

Valuation of plants and methods, 90 
Value of coal, 98-152 

laboring power, 212 
Variable expenses, 416 
Variation in cost of production, 337 

of unit, 336 
Visibility of equipment, 65 



Wages, basis of wages, 189 
determination of, 188-331 
economy on wages, 338 
expenditure of, 211-12 
increase of, 192 
maximum, 180 
minimum, 180 
wages, two-rate, 20 



Wages, with bonus, 182 
Waste, capitalization of, 94 

elimination of, 332-3 

labor, 96 

natural resources, 94 

of coal, 96-414 

fuel, 278 

material, 114 

reduction of, 220 

social significance of, 93-7 

waste of expense, 332-3 
Wastefulness in production, 421 
Water, condensing, 50 

feed, 50 

power, 398-402 
Weighing of coal, 284-5 
Williamson, G. E., 268 
Work, effect on efficiency, 168 

monotony of, 169 

reduction of — day, 168 

working day, 163-4 



W 56 




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* WORLD LEADER IN PAPER PRESERVA1 
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£ Deacidified using the Bookkeeper proc 
Neutralizing agent: Magnesium Oxide 
Treatment Date: Aug. 2003 



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Cranberry Township, PA 16066 
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